To preview our results and justify the question posed above, we note that in general the effects of these reforms are different when conducted within a monetary environment and depend on the size of financing frictions in the exportable relative to that in the importable sector.
Likewise, an export and production tax reform that keeps producer prices unaffected improves consumption efficiency, by reducing excessive consumption of the exportable goods, and at the same time increases government revenue, by reducing implicit consumption subsidies.
A reduction of import tariffs increases the output of the exportable good and thus exports, while a welfare increase (due to lower tariffs) increases the demand for the exportable good and thus reduces exports.
The penultimate section of the article analyzes the case where there is endogenous labor-leisure choice and shows that, even if the cash requirement ratios are the same for all importable and exportable goods, some of our previous results are still valid.
The national income and output, valued at international prices in terms of its exportable good A, is OL.
The classification into exportable and import-competing industries for a given country was, in the project, made by the author of the country study, based on the criteria spelled out in [10, Chapter 1].