Publikation: Aid effectiveness and limited enforceable conditionality
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2009
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Review of Economic Dynamics. 2009, 12(2), pp. 377-391. Available under: doi: 10.1016/j.red.2008.09.005
Zusammenfassung
This paper analyzes optimal foreign aid policy in a neoclassical growth framework with a conflict of interest between the donor and the recipient government. Aid conditionality is modeled as a limited enforceable dynamic contract. We define the contract to be self-enforcing if, at any point in time, the conditions imposed on aid funds are supportable by the threat of a permanent aid cutoff from then onward. Quantitative results show that optimal self-enforcing conditional aid strongly stimulates the developing economy and substantially increases welfare. However, aid effectiveness comes at a high cost: to ensure enforceability, less benevolent political regimes receive permanently larger aid funds in return for a less intense conditionality.
Zusammenfassung in einer weiteren Sprache
Fachgebiet (DDC)
330 Wirtschaft
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Foreign aid, Conditionality, Limited enforceability, Dynamic contracts, Neoclassical growth
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SCHOLL, Almuth, 2009. Aid effectiveness and limited enforceable conditionality. In: Review of Economic Dynamics. 2009, 12(2), pp. 377-391. Available under: doi: 10.1016/j.red.2008.09.005BibTex
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author={Scholl, Almuth}
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