Logic of aid in an intertemporal setting
AbstractThis paper studies the welfare implications of temporary foreign aid in the context of a simple two-country model of trade. In addition to its usual effects, a transfer of income in one period is assumed to influence the preferences of the recipient country in the following period. The implied changes in the terms of trade over the two periods are consistent with a number of possible outcomes with respect to the intertemporal welfare of the donor, the recipient, and the world as a whole. Particular attention is devoted to the conditions for strict Pareto improvement and the circumstances under which temporary aid transactions are likely to occur.
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Bibliographic InfoPaper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 06-2003.
Date of creation: Jun 2003
Date of revision:
Publication status: Published in Review of International Economics, Volume 12, 1, 2004, pages 151-161
Foreign aid; terms of trade; international transfers; intertemporal model;
Other versions of this item:
- NEP-ALL-2004-03-28 (All new papers)
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