Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81064
Authors: 
Fielding, David
Gibson, Fred
Year of Publication: 
2012
Series/Report no.: 
WIDER Working Paper 2012/26
Abstract: 
International aid has an ambiguous effect on the macroeconomy of the recipient country. To the extent that aid raises consumer expenditure, there will be some real exchange rate appreciation and a shift of resources away from traded goods production and into non-traded goods production. However, aid for investment in the traded goods sector can mitigate this effect. Also, a relatively high level of productivity in the non-traded goods sector combined with a high level of investment will tend to depreciate the real exchange rate. We examine aid inflows in 26 sub-Saharan African countries, and find a variety of macroeconomic responses. Some of the variation in the responses can be explained by variation in observable country characteristics; this has implications for donor policy.
Subjects: 
aid
Dutch disease
Africa
JEL: 
F41
O56
ISBN: 
978-92-9230-489-8
Document Type: 
Working Paper

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