Can Foreign Aid Accelerate Stabilisation?
AbstractThis paper studies the effect of foreign aid on economic stabilization. Following Alberto Alesina and Allan Drazen (1991), the authors model the delay in stabilizing as the result of a distributional struggle. Since the delay is used to signal each faction's strength, the effect of the transfer depends on the role it plays in the release of information. The authors show that this role depends on the timing of the transfer: foreign aid decided and transferred sufficiently early into the game leads to earlier stabilization; but aid decided or transferred too late is destabilizing and encourages further postponement of reforms. Copyright 1996 by Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 106 (1996)
Issue (Month): 436 (May)
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Other versions of this item:
- Casella, Alessandra & Eichengreen, Barry, 1994. "Can Foreign Aid Accelerate Stabilization?," CEPR Discussion Papers 961, C.E.P.R. Discussion Papers.
- Alessandra Casella & Barry Eichengreen, 1994. "Can Foreign Aid Accelerate Stabilization?," NBER Working Papers 4694, National Bureau of Economic Research, Inc.
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- F35 - International Economics - - International Finance - - - Foreign Aid
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