Trade Tax and Exchange Rate Coordination in the Context of Border Trading: A Theoretical Analysis

Omotunde E. G. Johnson
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Omotunde E. G. Johnson: International Monetary Fund

IMF Staff Papers, 1987, vol. 34, issue 3, 548-564

Abstract: Active cross-border (illegal) trade in many African countries has meant that producers of exports, and importers as well, direct their activities in accord with marketing-board prices, foreign trade taxes, and the convertibility of currencies. This paper demonstrates how these factors interact with the costs of border trade to determine the geographical direction of exports and imports. The economic costs that ensue when the relevant national economic policies remain uncoordinated among neighboring countries are discussed, and procedures for pertinent policy coordination are outlined.

Date: 1987
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