A rationing model of imports and the balance of payments in developing countries: Theoretical framework and an applicatiin to the Philippine economy

Iqbal Mehdi Zaidi

Research output: Contribution to journalArticle

Abstract

This paper provides a framework for addressing the issue of balance of payments adjustments when there are quantitative restrictions on imports. A major objective is to contribute to an understanding of how two key government policy instruments-domestic credit and import restrictions-interact in the determination of the balance of payments in developing countries. The government's decision making on the supply of domestic credit and imports is described by a reaction function derived from minimization of a loss function. An important feature of the model is the symmetric treatment of the demand and supply functions in the imports market. The estimation technique makes it possible to estimate a model for data in which some of the observations for consumer imports are on the domestic authorities' import supply function and some observations are on the private sector's demand function for imports.

Original languageEnglish (US)
Pages (from-to)43-61
Number of pages19
JournalApplied Economics
Volume20
Issue number1
DOIs
StatePublished - Jan 1988

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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