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The Economics of Post Conflict Aid

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  • James McHugh
  • Theodora Kosma
  • Dimitri G. Demekas

Abstract

Post conflict aid is different from conventional development aid and has different effects on the recipient economy. The paper builds a theoretical model tailored around the main stylized facts of post conflict aid and traces the impact of different kinds of post-conflict aid on capital accumulation, growth, welfare, and resource allocation. While both humanitarian and reconstruction aid are welfare-enhancing, humanitarian aid reduces long-run capital accumulation and growth. Reconstruction aid, on the other hand, may increase the long-run capital stock and, if carefully designed, avoid the pitfalls of the Dutch disease.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/198.

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Length: 36
Date of creation: 01 Nov 2002
Date of revision:
Handle: RePEc:imf:imfwpa:02/198

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References

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  1. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  2. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
  3. Gang, Ira N. & Ali Khan, Haider, 1990. "Foreign aid, taxes, and public investment," Journal of Development Economics, Elsevier, Elsevier, vol. 34(1-2), pages 355-369, November.
  4. Gong, Liutang & Zou, Heng-fu, 2001. "Foreign Aid Reduces Labor Supply and Capital Accumulation," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 5(1), pages 105-18, February.
  5. Michaely, Michael, 1981. "Foreign aid, economic structure, and dependence," Journal of Development Economics, Elsevier, Elsevier, vol. 9(3), pages 313-330, December.
  6. Dollar, David & Easterly, William, 1999. "The search for the key : aid, investment, and policies in Africa," Policy Research Working Paper Series 2070, The World Bank.
  7. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, Elsevier, vol. 27(1-2), pages 41-55, October.
  8. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(3), pages 31-49.
  9. Turnovsky, Stephen J. & Fisher, Walter H., 1995. "The composition of government expenditure and its consequences for macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 19(4), pages 747-786, May.
  10. Wijnbergen, Sweder Van, 1986. "Macroeconomic aspects of the effectiveness of foreign aid: On the two-gap model, home goods disequilibrium and real exchange rate misalignment," Journal of International Economics, Elsevier, Elsevier, vol. 21(1-2), pages 123-136, August.
  11. Peter Hjertholm & Jytte Laursen & Howard White, 2000. "Macroeconomic Issues in Foreign Aid," Discussion Papers 00-05, University of Copenhagen. Department of Economics.
  12. Fischer, Stanley & Alonso-Gamo, Patricia & Erickson von Allmen, Ulric, 2001. "Economic Developments in the West Bank and Gaza since Oslo," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(472), pages F254-75, June.
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Cited by:
  1. Dimico, Arcangelo, 2013. "The Evolution of Conflict and Effectiveness of Aid," MPRA Paper 47050, University Library of Munich, Germany.
  2. Kargbo, Philip Michael, 2012. "Impact of Foreign Aid on Economic Growth in Sierra Leone: Empirical Analysis," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Nasery, Jawid Ahmad, 2014. "The Economic Shock to Afghanistan Caused by Aid Reduction and Troops Withdrawal," IEE Working Papers 202, Institut fuer Entwicklungsforschung und Entwicklungspolitik, Ruhr-Universitaet Bochum.
  4. Michael Bleaney & Arcangelo Dimico, . "The Intensity of Conflict, Growth and Post-Conflict Recovery," Discussion Papers 11/03, University of Nottingham, CREDIT.

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