Import quotas, tied aid, capital accumulation, and welfare
AbstractAid conditional on the purchase of an imported capital good increases the supply of, and demand for, the good. Examining the effects of tied aid on capital accumulation, the current account, and welfare, we find that two resultant conflicting forces render the price of the capital good indeterminate. If the demand pressure is larger than the supply response, the capital stock increases at the expense of the current account and welfare improves. Alternatively, if the demand pressure is less than the supply response, capital is reduced. This may be detrimental to welfare.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 34 (2001)
Issue (Month): 3 (August)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- F35 - International Economics - - International Finance - - - Foreign Aid
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
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- Bharat R. Hazari & Jean-Pierre Laffargue & Chi-Chur Chao & Eden S. H. Yu, 2007. "A Dynamic Analysis of Tied Aid," Post-Print halshs-00270896, HAL.
- Bharat R. Hazari & Jean-Pierre Laffargue & Chi-Chur Chao & Eden S. H. Yu, 2007. "A Dynamic Analysis of Tied Aid," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00270896, HAL.
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