Measuring the foreign exchange premium and the premium for non-tradable outlays for 20 countries in Africa

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Periodical article

Title:	Measuring the foreign exchange premium and the premium for non-tradable outlays for 20 countries in Africa
Authors:	Kuo, Chun-Yan Salci, Sener Jenkins, Glenn P.
Year:	2015
Periodical:	South African Journal of Economics (ISSN 0038-2280)
Volume:	83
Issue:	2
Pages:	269-285
Language:	English
Geographic term:	Africa
Subjects:	exchange rates trade taxation economic models
External link:	https://doi.org/10.1111/saje.12068
Abstract:	In this paper, the authors develop an analytical general equilibrium framework to measure the foreign exchange premium and the premium for non-tradable outlays for a country. The framework allows them to capture in a consistent manner the impacts of the sourcing of funds and their expenditure on tradable and non-tradable goods and services of investment projects. An application of the model is carried out for 20 countries in Africa. The results show that the foreign exchange premiums range from 2.4% to 9.0% and the premium for non-tradable outlays from -0.7% to 2.9%. The empirical values depend on a number of factors, including the indirect taxes, production subsidies and international trade distortions of a country. These premiums should be incorporated into the economic evaluation of investment projects. Bibliogr., notes, ref., sum. [Journal abstract]