Macroeconomic Conditions and Import Surcharges in Selected Transition Economies

IMF Working Papers, May 1, 1999

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Study examines macroeconomic determinants of protection in the Czech and Slovak Republics, Hungary, and Poland during the 1990s.
Main analytical finding: appreciation of the real exchange rate was the main macroeconomic determinant of trade policy reversals in the 1990s.
Interpretation: balance of payments difficulties may have been used as an excuse for protection.
Counterfactual policy options suggested by the analysis: greater exchange rate flexibility and tighter fiscal policies could have been used instead of import surcharges to deal with external imbalances.
Potential adverse effects of surcharges identified: the surcharges may only have aggravated the external balance by slowing down exports and restructuring of production.

Consider greater exchange rate flexibility as an alternative tool to import surcharges for addressing external imbalances.
Consider tighter fiscal policies as a complementary alternative to trade protection measures.
Recognize that import surcharges can have contractionary effects on export performance and on the pace of production restructuring.

Subjects: Financial services, Fiscal policy, Foreign exchange, Imports, International trade, Real exchange rates, Real interest rates, Trade policy.
Keywords: exchange rate, exchange rate appreciation, exchange rates, import surcharge, Imports, monetary policy, policy mix, Real exchange rates, Real interest rates, Trade liberalization, Trade policy, trade policy reversal, trade policy stance, WP.

Macroeconomic Conditions and Import Surcharges in Selected Transition Economies - WP/99/62
- Macroeconomic Conditions and Import Surcharges in Selected Transition Economies - WP/99/62 (Markdown version)
- Macroeconomic Conditions and Import Surcharges in Selected Transition Economies - WP/99/62 (PDF)