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Shadow prices and trade restrictions in a monetary economy

Version 2 2024-06-18, 01:37
Version 1 2017-07-26, 12:17
journal contribution
posted on 2024-06-18, 01:37 authored by C-C Chao, ESH Yu
Using a cash-in-advance (CIA) framework, this paper examines the shadow price of foreign exchange under three types of trade restrictions. The CIA constraint creates a consumption distortion that alters the recipient's welfare. If the effective cash requirement for a unit of the exportable becomes smaller (larger), foreign transfer improves (reduces) welfare and hence the shadow price is greater (less) than unity. Both cases of untied and tied foreign transfer are examined.

History

Journal

Journal of macroeconomics

Volume

21

Season

Autumn

Pagination

755-764

Location

Amsterdam, The Netherlands

ISSN

0164-0704

eISSN

1873-152X

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

1999, Louisiana State University Press

Issue

4

Publisher

Elsevier

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