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The role of export subsidies in balance-of-payment crises

Version 2 2024-06-18, 01:37
Version 1 2017-07-26, 12:15
journal contribution
posted on 2024-06-18, 01:37 authored by H Beladi, C-C Chao
This paper investigates the effects of export subsidies when capital goods are imported for use in production of export goods. Export subsidies increase the demand for foreign capital at the expense of domestic consumption. The increase in the capital stock raises the real wage rate while leaving the real rental rate unchanged. However, if the speed of capital accumulation exceeds the savings rate, deterioration of the trade balance may occur. We show thereby that export subsidies can be linked to balance-of-payment crises.

History

Journal

European journal of political economy

Volume

19

Pagination

875-884

Location

Amsterdam, The Netherlands

ISSN

0176-2680

eISSN

1873-5703

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2003, Elsevier

Issue

4

Publisher

Elsevier

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