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Author Prati, Alessandro, 1961- author

Title Aid volatility and Dutch disease : is there a role for macroeconomic policies? / Alessandro Prati and Thierry Tressel
Published Washington, D.C. : International Monetary Fund, Research Dept., [2006]
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Description 1 online resource (63 pages) : illustrations
Series IMF working paper ; WP/06/145
IMF working paper ; WP/06/145
Summary This paper studies how macroeconomic policies can help offset two unintended and undesirable features of foreign aid: its volatility and Dutch disease. We present evidence that aid volatility augments trade balance volatility and that foreign aid, with the important exception of years of adverse shocks, depresses exports. We also find that these effects can be mitigated through changes in net domestic assets of the central bank-a variable that reflects both monetary and fiscal policy. To characterize the optimal policy, we develop a general equilibrium model in which the capital account is closed and aid influences productivity growth through positive (public expenditure) and negative (Dutch disease) externalities. In this setting, macroeconomic policies permanently affect real variables and can improve welfare if donors do not distribute foreign aid optimally over time
Bibliography Includes bibliographical references (pages 59-63)
Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. MiAaHDL
digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL
Print version record
Subject Economic assistance -- Econometric models.
Economic policy -- Econometric models.
Form Electronic book
Author Tressel, Thierry, author
International Monetary Fund. Research Department.
ISBN 1283514710