The dynamic implications of foreign aid and its variability

• 成果类型: Article
• 署名作者: Arellano, Cristina; Bulir, Ales; Lane, Timothy; Lipschitz, Leslie
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; International Monetary Fund
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2008.01.005
• 发表日期: 2009
• 页码: 87-102
• 关键词: Real business cycle; general equilibrium; aid; Transfer problem

摘要

The paper examines the effects of aid and its volatility on consumption, investment, and the structure of production in the context of an intertemporal two-sector general equilibrium model, calibrated using data for aid-dependent countries in Africa. A permanent flow of aid mainly finances consumption rather than investment-consistent with the historical failure of aid inflows to translate into sustained growth. Large aid flows are associated with higher real exchange rates and smaller tradable sectors because aid is a substitute for tradable consumption. Aid volatility results in substantial welfare losses, providing a motivation for recent discussions of aid architecture stressing the need for greater predictability of aid. These results are also consistent with evidence from cross-country regressions of manufactured exports, presented later in the paper. (C) 2008 International Monetary Fund. Published by Elsevier B.V. All rights reserved.