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On the substitutability between foreign aid and international credit

Subhayu Bandyopadhyay (), Sajal Lahiri and Javed Younas ()

Economics Letters, 2013, vol. 118, issue 2, 255-257

Abstract: We examine the effect of relaxing a binding borrowing constraint for a recipient country on the amount of foreign aid, in a two-country, two-period, trade-theoretic framework. The relaxation unambiguously reduces the flow of foreign aid.

Keywords: Foreign aid; Borrowing constraint; Fungibility; Public input (search for similar items in EconPapers)
JEL-codes: F35 O10 (search for similar items in EconPapers)
Date: 2013
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