EconPapers    
Economics at your fingertips  
 

The Credibility Problem in Trade Liberalisation: Empirical Evidence form Kenya

Ritva Reinikka ()

Journal of African Economies, 1996, vol. 5, issue 3, 444-68

Abstract: This paper quantifies the welfare cost created by speculative accumulation of imports in Kenya during four trade reforms between 1976-92. These episodes suffered from a lack of credibility because they were perceived to be either time-inconsistent or incompatible with the exchange rate, fiscal or monetary policy. Kenyan data confirms that the private sector was able to anticipate the fate of the reforms and that it hedged against their reversal by accumulating foreign exchange licenses and bonded and actual imports. There are some indications of deferral of investment and increased liquidity during the abortive reforms. The speculative response seems to be self-fulfilling, as rapidly declining external reserves usually forced the government to abandon the reforms. The 1980 import liberalisation was the most costly attempt. Copyright 1996 by Oxford University Press.

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jafrec:v:5:y:1996:i:3:p:444-68

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Journal of African Economies is currently edited by Marcel Fafchamps

More articles in Journal of African Economies from Centre for the Study of African Economies (CSAE) Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2020-09-07
Handle: RePEc:oup:jafrec:v:5:y:1996:i:3:p:444-68