Exchange market reform, inflation, and fiscal deficits
Titel:
Exchange market reform, inflation, and fiscal deficits
Auteur:
Agenor, Pierre-Richard Ucer, E. Murat
Verschenen in:
Journal of economic policy reform
Paginering:
Jaargang 3 (1999) nr. 1 pagina's 81-96
Jaar:
1999-02
Inhoud:
This paper examines the effects of exchange market reform on inflation and quasifiscal deficits in developing countries. The first part presents the conceptual framework, which identifies a variety of implicit taxes and subsidies that must be taken into account (in addition to implicit taxes on exports, as emphasized by Pinto (1991)) in assessing the fiscal and inflationary effects of exchange market reform. A formula that attempts to capture explicitly these taxes and subsidies is derived. The second part applies the formula to six countries (Guyana, India, Jamaica, Kenya, Sierra Leone, and Sri Lanka). The results suggest that exchange market reform may lead to a significant reduction in reliance on the inflation tax.
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