Foreign aid, leisure–effort choice, and economic growth
Xiangbo Liu,
Xiaomeng Zhang and
Chi-Chur Chao
Economic Modelling, 2014, vol. 43, issue C, 435-438
Abstract:
Using an endogenous growth model, this paper examines the growth and welfare effects of foreign aid in the recipient economy. The emphasis is on the incentive factor of the effort–leisure choice. Besides financing public services, part of the aid is transferred to the public. This increases individual wealth, thereby providing less incentives to individuals for human capital acquisition, but with more leisure. Thus, foreign aid may not always help the growth and welfare of the economy. Taking this incentive factor into account, we further study the issue on aid allocation in achieving the highest levels of growth and welfare. Along the balanced growth path, aid allocation for welfare maximization is different from that under growth maximization.
Keywords: Foreign aid; Efforts; Leisure; Growth; Welfare (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999314003332
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:43:y:2014:i:c:p:435-438
DOI: 10.1016/j.econmod.2014.09.006
Access Statistics for this article
Economic Modelling is currently edited by S. Hall and P. Pauly
More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().