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Project Evaluation, Government Intervention and the Price of Foreign Exchange

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  • Haim Levy

Abstract

[fre] L'intervention gouvernementale, dont le but est d'encourager l'investissement, et en particulier l'exportation, est un phénomène commun dans plusieurs pays industrialisés et dans presque tous les pays sous-développés.. Cet article analyse les prix implicites des échanges extérieurs dans l'économie israélienne induits de l'aide et les incitations gouvernementales à l'exportation. Nous présentons plusieurs méthodes pour le calcul du prix des échanges extérieurs et procédons à l'analyse comparative de l'effet de ces incitations sur la profitabilité de la firme d'une part, et d'autre part, celle de la profitabilité du projet pour l'économie. Nous commençons par une étude en condition de certitude et poursuivons par une étude en condition d'incertitude. [eng] Project evaluation, government intervention and the price of foreign exchange. . This paper analyzes the implied price of foreign exchange in the Israeli economy, induced by government incentive to export. We first present various methods for calculating the price of foreign exchange, then we proceed in analyzing the impact of the incentives on profitability from the individual firm's point of view, versus the project profitability for the economy. The analysis is carried oui first under conditions of certainty and then uncertainty is taken into account.

Suggested Citation

  • Haim Levy, 1979. "Project Evaluation, Government Intervention and the Price of Foreign Exchange," Revue Économique, Programme National Persée, vol. 30(1), pages 31-71.
    • Handle: RePEc:prs:reveco:reco_0035-2764_1979_num_30_1_408449
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    References listed on IDEAS

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    1. Levy, Haim & Sarnat, Marshall, 1975. "Investment Incentives and the Allocation of Resources," Economic Development and Cultural Change, University of Chicago Press, vol. 23(3), pages 431-451, April.
    2. Bela Balassa & Daniel M. Schydlowsky, 1968. "Effective Tariffs, Domestic Cost of Foreign Exchange, and the Equilibrium Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 76(3), pages 348-348.
    3. Edmar Bacha & Lance Taylor, 1971. "Foreign Exchange Shadow Prices: A Critical Review of Current Theories," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(2), pages 197-224.
    4. Kenneth J. Arrow & Robert C. Lind, 1974. "Uncertainty and the Evaluation of Public Investment Decisions," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 3, pages 54-75, Palgrave Macmillan.
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