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The Taxation Implicit in Two-Tiered Exchange Rate Systems

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Author Info

  • Huizinga, H.P.

    (Tilburg University, Center for Economic Research)

Abstract

A two-tiered exchange rate system can be interpreted as a set of separate taxes on money and other financial assets.If the official two-tiered exchange rate system coexists with a black market for foreign exchange, then there is an implicit taxation of international goods trade as well.This paper presents some evidence on the tax rates and tax revenues implicit in the exchange rate systems of the Bahamas (from 1978 to 1995), the Dominican Republic (from 1970 to 1984) and South Africa (from 1973 to 1995).Only the Bahamas appears to have received positive tax revenues from the implicit taxation of international capital flows, while only South Africa is estimated to have obtained positive tax revenues from the implicit taxation of international goods trade.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1996-100.

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Date of creation: 1996
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Handle: RePEc:dgr:kubcen:1996100

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Web page: http://center.uvt.nl

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Keywords: taxation; exchange rate;

References

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  1. Joyce Sherwood, 1956. "Revenue Features of Multiple Exchange Rate Systems: Some Case Studies," IMF Staff Papers, Palgrave Macmillan, vol. 5(1), pages 74-107, February.
  2. Alan C. Stockman & Alejandro Hernandez D., 1985. "Exchange Controls, Capital Controls, and International Financial Markets," NBER Working Papers 1755, National Bureau of Economic Research, Inc.
  3. Huizinga, H.P., 1991. "Law enforcement and the black market exchange rate," Open Access publications from Tilburg University urn:nbn:nl:ui:12-155138, Tilburg University.
  4. Adams, Charles & Greenwood, Jeremy, 1985. "Dual exchange rate systems and capital controls: An investigation," Journal of International Economics, Elsevier, vol. 18(1-2), pages 43-63, February.
  5. Vito Tanzi, 1995. "Government Role and the Efficiency of Policy Instruments," IMF Working Papers 95/100, International Monetary Fund.
  6. Huizinga, H., 1994. "Real Exchange Rate Misalignment and Redistribution," Papers 9490, Tilburg - Center for Economic Research.
  7. Jeremy Greenwood & Kent P. Kimbrough, 1987. "An Investigation in the Theory of Foreign Exchange Controls," Canadian Journal of Economics, Canadian Economics Association, vol. 20(2), pages 271-88, May.
  8. Rudiger Dornbusch, 1985. "Special Exchange Rates for Capital Account Transactions," NBER Working Papers 1659, National Bureau of Economic Research, Inc.
  9. Huizinga, H.P., 1996. "The Dual Role of Money and Optimal Financial Taxes," Discussion Paper 1996-99, Tilburg University, Center for Economic Research.
  10. Giovannini, Alberto & de Melo, Martha, 1993. "Government Revenue from Financial Repression," American Economic Review, American Economic Association, vol. 83(4), pages 953-63, September.
  11. Joshua Aizenman, 1985. "On the Complementarity of Commercial Policy, Capital Controls and Inflation Tax," NBER Working Papers 1583, National Bureau of Economic Research, Inc.
  12. Frenkel, Jacob A. & Razin, Assaf, 1989. "Exchange-rate management viewed as tax policies," European Economic Review, Elsevier, vol. 33(4), pages 761-781, April.
  13. Pinto, Brian, 1991. "Black markets for foreign exchange, real exchange rates and inflation," Journal of International Economics, Elsevier, vol. 30(1-2), pages 121-135, February.
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Cited by:
  1. Masahiro Hori & Yu Ching Wong, 2008. "Efficiency Costs of Myanmar’s Multiple Exchange Rate Regime," IMF Working Papers 08/199, International Monetary Fund.
  2. Windt, P.C. van der & Schaling, E. & Huizinga, H.P., 2007. "Capital Controls and Foreign Investor Subsidies Implicit in South Africa's Dual Exchange Rate System," Discussion Paper 2007-91, Tilburg University, Center for Economic Research.
  3. Huizinga, H.P., 1996. "The Dual Role of Money and Optimal Financial Taxes," Discussion Paper 1996-99, Tilburg University, Center for Economic Research.

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