The Economics of Post Conflict Aid
IMF Working Papers, November 1, 2002
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- The Economics of Post Conflict Aid
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Bibliographic details
- Authors: James McHugh, Theodora Kosma, Dimitri G Demekas
- Published: November 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451860078.001
Summary and Purpose
- Post conflict aid is different from conventional development aid and has different effects on the recipient economy.
- The paper builds a theoretical model tailored around the main stylized facts of post conflict aid and traces the impact of different kinds of post-conflict aid on capital accumulation, growth, welfare, and resource allocation.
- While both humanitarian and reconstruction aid are welfare-enhancing, humanitarian aid reduces long-run capital accumulation and growth.
- Reconstruction aid may increase the long-run capital stock and, if carefully designed, avoid the pitfalls of the Dutch disease.
Key Findings
- Humanitarian aid:
- Is welfare-enhancing in the short run.
- Reduces long-run capital accumulation and growth.
- Reconstruction aid:
- Is welfare-enhancing and can increase the long-run capital stock.
- If carefully designed, can avoid the pitfalls of the Dutch disease.
- Theoretical approach:
- A model is constructed around the main stylized facts of post conflict aid to analyze effects on capital accumulation, growth, welfare, and resource allocation.
Subjects and Keywords
- Subject: Capital accumulation, Consumption, Development assistance, Foreign aid, Labor supply
- Keywords: capital stock, WP
Content in this bundle
- The Economics of Post Conflict Aid - WP/02/198