x]) denotes how much more or less cash the consumer spends on importables
relative to that spent on the exportable good or, alternatively, the mark-up over the relative prices of importables
q faced by a consumer.
, in contrast, would be harmed by the reduction in tariff and nontariff barriers and would be forced to compete more directly with imported goods.
From standard properties of the expenditure and GDP functions, we know that the Hicksian demand functions for importable
goods are [e.
The capital/labour ratio of importables
increased markedly relative to exportables from 1986 to 1996.
Ceteris paribus, firms would purchase importables
prior to the anticipated devaluation and hold them to collect capital gains.
Interestingly, we find that if the consumption of the exportable commodity requires larger cash balances than the consumption of the importable
, then contrary to standard results, an import quota may promote national welfare.
whether it is coming from increases in the price of importables
or decreases in the price of exportables.
Terms of trade can be represented by the external relative price of exportables to importable
2~ is the marginal propensity to consume the importable
It is worth noting that the size of the market in the host country is likely to influence the FDI undertaken to produce importables
rather than exportables.
Notice, however, that in the incomplete asset market set up of our model, we cannot allow the writing of contracts on both importables
and exportables because this may violate the zero balance of trade assumption.
The small open economy model includes three commodities namely, non-tradables, importables
This finding is an indication towards the nature of change in the tastes and technology for importables
in Pakistan and the authors can explore its implications for the import policy of Pakistan.
Selection of these three sectors is dictated by the availability of data on these sectors, and the fact that the majority of the emigrants belong to these sectors: We consider agricultural goods as exportables and manufacturing goods as importables
because Pakistan is a net exporter of agricultural goods and a net importer of manufacturing goods.
In the case of a small-economy model, a country is assumed to be a price taker in the world market for importables
and exportables alike.