 The distributional consequences of foreign transfers: do they reduce or exacerbate inequality?Serpil Bouza and Stephen J Turnovsky Oxford Economic Papers, 2012, vol. 64, issue 4, 702-735 Abstract: This paper employs a dynamic two-sector dependent-economy model to study the impact of foreign transfers on a country's aggregate economic performance, as well as its distributions of wealth, income, and welfare. The transfers may be allocated to debt reduction, or to the productivity enhancement of the traded or nontraded sector. The effect of the transfer on aggregate economic performance depends crucially upon: (i) the relative capital intensities of the two productive sectors, and (ii) the allocation of the transfers across the sectors. The consequences for wealth and income inequality depend not only upon these factors, but also upon (iii) the economy's access to the world financial market. Most of the analysis is conducted using simulations, where we characterize the dynamic evolution of both the aggregate economy and the inequality measures. Whether growth and inequality are positively or negatively associated over time depends upon the three factors noted above. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:64:y:2012:i:4:p:702-735 Ordering information: This journal article can be ordered from Access Statistics for this article Oxford Economic Papers is currently edited by James Forder and Francis J. Teal More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.