The Cost of Export Subsidies: Evidence From Costa Rica

October 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper develops a model to estimate the effects of export subsidies on the supply of exports. Using data for Costa Rica over the 1980’s, it is shown that while the export subsidy scheme in operation led to an increase in exports, the direct fiscal costs of the scheme were quite large. Furthermore, the subsidy scheme led to a significant increase of imports. These results suggest that elimination of export subsidies would not have a particularly harmful effect on the trade balance, and would increase the fiscal position and generate economic efficiency besides.

Subject: Depreciation, Exchange rates, Export earnings, Export subsidies, Exports, Foreign exchange, International trade, National accounts

Keywords: anti-export bias, baseline export, Depreciation, Exchange rates, export contract, Export earnings, export incentive, export promotion policy, export revenue, Export subsidies, export subsidy, export supply, Exports, supply curve, supply response, WP

Pages:
36
Volume:
1991
DOI:
---
Issue:
094
Series:
Working Paper No. 1991/094
Stock No:
WPIEA0941991
ISBN:
9781451950670
ISSN:
1018-5941

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Notes

Also published in Staff Papers, Vol. 39, No. 1, March 1992.

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