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Article
Measuring The Foreign Exchange Premium And The Premium For Non-Tradable Outlays For Twenty Countries In Africa
South African Journal of Economics (2013)
  • Sener Salci, Queen's University - Kingston, Ontario
Abstract
In this paper we 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 us 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 4.00% to 9.50% and the premium for non-tradable outlays from -1.75% to 1.50%. 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.
Keywords
  • Distortions,
  • taxes,
  • subsidies,
  • foreign exchange premium,
  • premium for nontradable outlays,
  • tradable goods,
  • Africa
Publication Date
Spring September, 2013
Citation Information
Sener Salci. "Measuring The Foreign Exchange Premium And The Premium For Non-Tradable Outlays For Twenty Countries In Africa" South African Journal of Economics (2013)
Available at: http://works.bepress.com/sener-salci/3/