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On Measuring the Social Opportunity Cost of Foreign Exchange

Author

Listed:
  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University,North Cyprus)

  • Chun-Yan Kuo

    (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada)

Abstract

In this paper a multi-sector general equilibrium model is developed to measure the social opportunity cost of foreign exchange. The model allows one to evaluate this parameter and take explicit account of the combined impact of the change in the demand for imports and the impact of the method of financing used by the government to pay for them. Three alternative ways of financing and increasing the demand for foreign exchange have been evaluated using this model. These results indicate that the social value of foreign exchange is approximately 6.5 per cent greater than the market exchange rate in Canada.

Suggested Citation

  • Glenn P. Jenkins & Chun-Yan Kuo, 1985. "On Measuring the Social Opportunity Cost of Foreign Exchange," Development Discussion Papers 1985-06, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:5508
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    Cited by:

    1. Glenn P. Jenkins & Chun-Yan kuo & Arnold C. Harberger, 2020. "Analyse Couts-Avantages Pour Les Decisions D’Investissement Chapitre 9; Le Prix Ombre Des Bourses D'échange Et De Marchandises Non Commercialisables," Development Discussion Papers 2020-09, JDI Executive Programs.
    2. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 9 (The Shadow Price of Foreign Exchange and Non-Tradable Outlays)," Development Discussion Papers 2011-09, JDI Executive Programs.
    3. Chun-Yan Kuo & Sener Salci & Glenn P. Jenkins, 2015. "Measuring the Foreign Exchange Premium and the Premium for Non-Tradable Outlays for 20 Countries in Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 269-285, June.
    4. Barichello, Richard R., 1982. "Government Policy in Support of Domestic Agriculture: Costs and Benefits - Canada," 1982: Agriculture, Trade, and Development: A Comparative Look at U.S., Canadian, and European Community Policies Meeting, December 1982, Washington, DC 50851, International Agricultural Trade Research Consortium.

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