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The Economic Cost of Foreign Exchange for South Africa
Author(s) -
Harberger Arnold C,
Jenkins Glenn P,
Kuo ChunYan,
Mphahlele M Benjamin
Publication year - 2003
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2003.tb01310.x
Subject(s) - queen (butterfly) , economic history , history , classics , library science , hymenoptera , botany , biology , computer science
IN ECONOMIC COST BENEFIT ANALYSIS there is a need to choose a numeraire in which all costs and benefits are evaluated. In recent years the most common practice has been to express all costs and benefits in terms of domestic currency at the domestic price level. When this numeraire is chosen it is necessary to adjust all transactions that are made with international traded goods and involve foreign exchange to account for the divergence that arise between the financial cost of foreign exchange and its economic value. 1 The purpose of this paper is to develop an analytical framework that will enable us to estimate the economic cost of foreign exchange for South Africa. Since the demand for imported goods is generally distorted by import tariffs and non-tariff barriers (as is the supply of exports by