On the substitutability between foreign aid and international credit
AbstractWe examine the effect of relaxing a binding borrowing constraint for a recipient country on theamount of foreign aid it receives. We do so by developing a two-country, two-period trade-theoretic model. The relaxation of the borrowing constraint reduces the flow of foreign aid, suggesting that the donor views developing nations' access to international credit markets as a substitute for foreign aid.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2012-043.
Date of creation: 2012
Date of revision:
Other versions of this item:
- Bandyopadhyay, Subhayu & Lahiri, Sajal & Younas, Javed, 2013. "On the substitutability between foreign aid and international credit," Economics Letters, Elsevier, vol. 118(2), pages 255-257.
- F35 - International Economics - - International Finance - - - Foreign Aid
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-11 (All new papers)
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