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- Title
PROJECT APPRAISAL AND FOREIGN EXCHANGE CONSTRAINTS: A REJOINDER.
- Authors
Bell, Clive; Devarajan, Shantayanan
- Abstract
This article discusses the Dinwiddy and Teal(DT) criticisms of the Blitzer, Dasgupta and Stiglitz(BDS) piece applies to the 1983 paper, which discussed the border price rule as an equilibrating device in commodity taxation. DT's main claim is that BDS assertion that the border price rule fails to hold when commodity taxation is used as the equilibrating device is false. DT show that when commodity taxation is the equilibrating device, shadow prices are proportional to world prices. Moreover, DT's specific criticisms of BDS's treatment of the public sector's budget do not carry over to our model. Hence endogenous foreign borrowing in this model arises precisely in the case when the public sector's budget constraint is not satisfied due to tax rates and public expenditures being exogenously given.
- Subjects
TAXATION; PRICING; ECONOMIC equilibrium; NONPROFIT organizations; BUDGET; TAX rates
- Publication
Economic Journal, 1989, Vol 99, Issue 396, p481
- ISSN
0013-0133
- Publication type
Article
- DOI
10.2307/2234041