Home » Welfare Effects of Uzbekistans Foreign Exchange Regime by Christoph B. Rosenberg
Welfare Effects of Uzbekistans Foreign Exchange Regime Christoph B. Rosenberg

Welfare Effects of Uzbekistans Foreign Exchange Regime

Christoph B. Rosenberg

Published March 1st 2000
ISBN : 9781281602084
ebook
25 pages
Enter the sum

 About the Book 

In January 1997, Uzbekistan formally (re)introduced a system of multiple exchange rates and restrictions on current account transactions with the aim of promoting import substituting industries, protecting foreign exchange reserves and subsidizingMoreIn January 1997, Uzbekistan formally (re)introduced a system of multiple exchange rates and restrictions on current account transactions with the aim of promoting import substituting industries, protecting foreign exchange reserves and subsidizing basic food imports. Several recent studies have dealt with the effects of this system on sectoral distribution, foreign investment and macroeconomic stability.2 However, its consequences for economic efficiency and welfare, while acknowledged, have so far received little attention. This paper, which builds on an earlier article by Rosenberg, Ruocco, and Wiegard (1999) tries to address this question. Specifically, it attempts to identify and quantify the substantial microeconomic distortions on export and import markets that result from the existence of at least three distinct exchange rates in Uzbekistan. This analysis also shows how a simple exercise in welfare economics can provide insights into the appropriate sequencing of reforms. The approach presented here may thus serve as a blueprint for structural policies aiming at the removal of distortions in general.