The Australian export expansion grants scheme / Ephraim Kleiman and Jonathan J. Pincus.

Abstract

Under the Export Expansion Grants Act of 1978, certain groups of Australian exporters are eligible for a governmental grant on their incremental export revenues, at rates which decrease with the absolute magnitude of the export increment. We have shown elsewhere that a marginal export subsidy may result in cyclical export fluctuations (Kleiman and Pincus, 1980a). It is shown here that the regressiveness of the EEG subsidy pattern generates cycles of varying amplitude and duration, depending on the characteristics of individual firms. It is also shown that the EEG scheme offers, in effect, a higher range of subsidy rates to small firms and to those which already export a high proportion of their output. Show more