Export duty rebates and export performance: Theory and China's experience

Using a general-equilibrium model. this paper finds that, for an economy su ffering from sector-specific unemployment export tax rebates on imported fo reign intermediates can expand its related down- and up-stream industries, thereby boosting exports. This result is verified by using China's data; th e export tax rebate, foreign income, and exchange rate volatility contribut e significantly to China's exports in the long nln, but only the export tax rebate promotes exports in the short run. (C) 2001 Academic Press.