Foreign Aid Policy and Sources of Poverty: A Quantitative Framework

Alex Mourmouras and Peter Rangazas

IMF Staff Papers, 2007, vol. 54, issue 1, 59-90

Abstract: The econometric literature has been unable to establish a robust association between foreign aid and growth and poverty reduction. In this paper, we argue that aid effectiveness must be assessed using methods that go beyond cross-country regressions. We calibrate a dynamic general equilibrium model that is capable of generating large sustained income gaps between rich and poor countries. The model quantifies three sources of poverty: (1) lack of access to international capital, (2) low schooling and high fertility (a poverty trap), and (3) an antigrowth domestic fiscal policy set by an elite. We analyze policies designed to address each source of poverty and compare the aid cost of their implementation. The policies differ dramatically in the extent and timing of their growth effects, and in the aid cost of their implementation. IMF Staff Papers (2007) 54, 59–90. doi:10.1057/palgrave.imfsp.9450005

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.palgrave-journals.com/imfsp/journal/v54/n1/pdf/9450005a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/imfsp/journal/v54/n1/full/9450005a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Foreign Aid Policy and Sources of Poverty: A Quantitative Framework (2006)
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:pal:imfstp:v:54:y:2007:i:1:p:59-90

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().