The Macroeconomics of Scaling Up Aid: Lessons from Recent Experience

Andrew Berg (), Mumtaz Hussain, Shaun Roache, Amber Mahone, Tokhir Mirzoev () and Shekhar Aiyar

No 2007/002, IMF Occasional Papers from International Monetary Fund

Abstract: This study analyzes key issues associated with large increases in aid, including absorptive capacity, Dutch disease, and inflation. The authors develop a framework that emphasizes the different roles of monetary and fiscal policy and apply it to the recent experience of five countries: Ethiopia, Ghana, Mozambique, Tanzania, and Uganda. These countries have often found it difficult to coordinate monetary and fiscal policy in the face of conflicting objectives, notably to spend the aid money on domestic goods and to avoid excessive exchange rate appreciation.

Keywords: OP; nominal exchange rate; depreciation; deficit; exchange rate appreciation; terms-of-trade shock; treasury bill sale; currency depreciation; Real exchange rates; Inflation; Treasury bills and bonds; Monetary base; Africa (search for similar items in EconPapers)
Pages: 114
Date: 2007-03-23
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Citations: View citations in EconPapers (25)

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