The present paper focuses on the role of domestic resource mobilization for financing poverty reduction strategies. Policy makers should be aware of important macroeconomic trade-offs associated with MDG strategies financed from tax increases or domestic borrowing. The trade-offs are largely intertemporal: can poor and middle-income countries absorb the initial financing costs in order to achieve expected gains in productivity and human development over time? This calls for a dynamic economy-wide framework to identify the importance of such trade-offs. The paper presents such a framework and illustrates its usefulness in applications for Costa Rica and Ecuador.
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Paper provided by United Nations, Department of Economics and Social Affairs in its series Working Papers with number
36.
Find related papers by JEL classification: C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models I3 - Health, Education, and Welfare - - Welfare and Poverty F35 - International Economics - - International Finance - - - Foreign Aid O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
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