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Foreign Aid and Consumption Smoothing

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  • Erwin Tiongson
  • Benedict J. Clements
  • Sanjeev Gupta
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    Abstract

    Global food aid is considered a critical consumption smoothing mechanism in many countries. However, its record of stabilizing consumption has been mixed. This paper examines the cyclical properties of food aid with respect to food availability in recipient countries, with a view to assessing its impact on consumption in some 150 developing countries and transition economies, covering 1970 to 2000. The results show that global food aid has been allocated to countries most in need. Food aid has also been countercyclical within countries with the greatest need. However, for most countries, food aid is not countercyclical. The amount of food aid provided is also insufficient to mitigate contemporaneous shortfalls in consumption. The results are robust to various specifications and filtering techniques and have important implications for macroeconomic and fiscal management.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/40.

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    Length: 26
    Date of creation: 01 Feb 2003
    Date of revision:
    Handle: RePEc:imf:imfwpa:03/40

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    Related research

    Keywords: Social safety nets; food aid; food availability; food production; food security; global food; food aid flows; food imports; food policy; food shortages; food aid programs; domestic food production; domestic food; food supply; food insecurity; food supplies; world food programme; food consumption; food safety; food needs; food surpluses; food assistance programs; undernutrition; malnutrition rates; food output; food aid in cereals; food crises; health status; food assistance; food production per capita; food aid convention; undernourishment; food self-sufficiency;

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    References

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    1. Bulir, Ales & Hamann, A. Javier, 2001. "How Volatile and Unpredictable are Aid Flows, and What are the Policy Implications?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    2. Diven, Polly J., 2001. "The domestic determinants of US food aid policy," Food Policy, Elsevier, vol. 26(5), pages 455-474, October.
    3. Clay, Daniel C. & Molla, Daniel & Habtewold, Debebe, 1999. "Food aid targeting in Ethiopia: A study of who needs it and who gets it," Food Policy, Elsevier, vol. 24(4), pages 391-409, August.
    4. Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, 05.
    5. Maxwell, S. J. & Singer, H. W., 1979. "Food aid to developing countries: A survey," World Development, Elsevier, vol. 7(3), pages 225-246, March.
    6. Shapouri, Shahla, 1990. "Food Aid: Motivation and Allocation Criteria," Foreign Agricultural Economic Report (FAER) 147994, United States Department of Agriculture, Economic Research Service.
    7. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
    8. Pallage, Stephane & Robe, Michel A, 2001. "Foreign Aid and the Business Cycle," Review of International Economics, Wiley Blackwell, vol. 9(4), pages 641-72, November.
    9. Trueblood, Michael A. & Shapouri, Shahla & Henneberry, Shida Rastegari, 2001. "Policy Options To Stabilize Food Supplies: A Case Study Of Southern Africa," Agricultural Information Bulletins 33703, United States Department of Agriculture, Economic Research Service.
    10. Fabio Canova, 1994. "Does detrending matter for the determination of the reference cycle and the selection of turning points?," Economics Working Papers 113, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 1995.
    11. Ball, Richard & Johnson, Christopher, 1996. "Political, Economic, and Humanitarian Motivations for PL 480 Food Aid: Evidence from Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 44(3), pages 515-37, April.
    12. Barrett, Christopher B., 2002. "Food security and food assistance programs," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 40, pages 2103-2190 Elsevier.
    13. Shapouri, Shahla & Rosen, Stacey L., 2001. "Food Security and Food Aid Distribution," Agricultural Information Bulletins 33651, United States Department of Agriculture, Economic Research Service.
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    Cited by:
    1. Stéphane Pallage & Michel A. Robe & Catherine Bérubé, 2006. "The Potential of Foreign Aid as Insurance," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 5.
    2. Barrett, Christopher B., 2002. "Food Aid Effectiveness: "It'S The Targeting, Stupid!"," Working Papers 14754, Cornell University, Department of Applied Economics and Management.
    3. Max Blouin & Stéphane Pallage, 2007. "Humanitarian Relief and Civil Conflict," Cahiers de recherche 0706, CIRPEE.
    4. Bulír, Ales & Hamann, A. Javier, 2008. "Volatility of Development Aid: From the Frying Pan into the Fire?," World Development, Elsevier, vol. 36(10), pages 2048-2066, October.
    5. Eun Kwan Choi, 2005. "Infrastructure Aid, Deindustrialization, and Welfare," IMF Working Papers 05/150, International Monetary Fund.
    6. Fielding, David & Mavrotas, George, 2005. "The Volatility of Aid," Working Paper Series DP2005/06, World Institute for Development Economic Research (UNU-WIDER).
    7. Kuhlgatz, Christian & Abdulai, Awudu & Barrett, Christopher B., 2009. "Food Aid Allocation Policies: Donor Coordination and Responsiveness to the Needs of Recipient Countries," 2009 Conference, August 16-22, 2009, Beijing, China 51686, International Association of Agricultural Economists.
    8. Stéphane Pallage & Michel A. Robe & Catherine Bérubé, 2004. "On the Potential of Foreign Aid as Insurance," Cahiers de recherche 0404, CIRPEE.
    9. Sanjeev Gupta & Catherine A. Pattillo & Smita Wagh, 2006. "Are Donor Countries Giving More or Less Aid?," IMF Working Papers 06/1, International Monetary Fund.

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