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- W3122452912 abstract "This paper analyzes optimal foreign aid policy in a neoclassical framework with a conflict of interest between the donor and the recipient government. Aid conditionality is modelled as a limited enforceable contract. We define conditional aid policy to be self-enforcing if, at any point in time, the conditions imposed on aid funds are supportable by the threat of a permanent aid cutoff from then onward. Quantitative results show that the effectiveness of unconditional aid is low while self-enforcing conditional aid strongly stimulates the economy. However, increasing the welfare of the poor comes at high cost: to ensure aid effectiveness, less democratic political regimes receive permanently larger aid funds." @default.
- W3122452912 created "2021-02-01" @default.
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- W3122452912 date "2005-08-01" @default.
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- W3122452912 title "Aid Effectiveness and Limited Enforceable Conditionality" @default.
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