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Endogenous Restrictions for Least Developed Economies
Author(s) -
Suliman Osman
Publication year - 2003
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00392
Subject(s) - tariff , economics , endogeneity , international economics , subsidy , commercial policy , international trade , macroeconomics , econometrics , market economy
The paper explores appropriate trade restrictions for least developed countries facing external terms‐of‐trade disturbances in terms of minimizing variations in the real sphere of the economy. Two alternative models are explored: export‐subsidy versus import‐tariff endogeneity. The theoretical model indicates that the tariff regime is a more appropriate policy. Empirical evidence from Sudan (1950– 1991) suggests that, although there is some discernable evidence that Sudan followed the tariff regime, the country did not apply the policy correctly, adjusting the tariff mainly in response to foreign import prices rather than foreign export prices, which are more unstable.