The Curse of the Elders? Aid Effectiveness and Gerontocracy in Developing Countries
Abstract(english) In this paper we use a simple standard overlapping-generation model to assess the impact of foreign aid. Because of deference to the elders, donors are not able to modify the sharing out of aid between the old and the young in the recipient economy. The model shows that, if aid is considered as a device intended to help attain the spontaneous steady state of the economy, it may lead to a rise or fall in savings, and hence in the growth rate of the economy, depending on a threshold share of aid accruing to elders. Alternately, if aid is intended to help the economy to reach its golden-rule steady state, the relevant level of aid increases with the share of aid accruing to elders, up to a certain threshold. If this share is higher than the threshold, the optimal level of aid is negative. _________________________________ (français) Nous utilisons un modèle à générations imbriquées pour montre que la répartition de l’aide entre jeunes et vieux peut avoir un impact sur l’efficacité de l’aide en termes d’épargne, de croissance et de bien-être. Les sociétés en développement sont généralement marquées par une « déférence pour les anciens » profondément ancrée dans la culture traditionnelle. Nous supposons que les donateurs sont incapables de manipuler cette part, et nous montrons que la part de l’aide qui revient aux vieux a un impact sur la croissance et le bien-être positif en dessous d’un certain seuil et négatif au-delà.
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Bibliographic InfoPaper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2011/03.
Length: 18 pages
Date of creation: Jan 2011
Date of revision:
Developing Countries; Elders; Aid effectiveness; Overlapping Generations Models.;
Other versions of this item:
- Raffinot, Marc & Venet, Baptiste, 2011. "The Curse of the Elders? Aid Effectiveness and Gerontocracy in Developing Countries," Economics Papers from University Paris Dauphine 123456789/5745, Paris Dauphine University.
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- F35 - International Economics - - International Finance - - - Foreign Aid
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-29 (All new papers)
- NEP-DEV-2011-08-29 (Development)
- NEP-DGE-2011-08-29 (Dynamic General Equilibrium)
- NEP-LAM-2011-08-29 (Central & South America)
- NEP-MAC-2011-08-29 (Macroeconomics)
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