Zanna, Luis-Felipe; Berg, Andrew; Mirzoev, Tokhir; … - International Monetary Fund (IMF) - 2010
We develop a tractable open-economy new-Keynesian model with two sectors to analyze the short-term effects of aid-financed fiscal expansions. We distinguish between spending the aid, which is under the control of the fiscal authorities, and absorbing the aid-using the aid to finance a higher...