This paper examines the effects of international income transfers on capital accumulation and welfare in a one-sector overlapping generations model. It is shown that a strong form of the transfer paradox - in which the donor country experiences a welfare gain while the recipient country...

In the context of a two-sector overlapping-generations model it is demonstrated that a steady-state transfer paradox may arise under commodity trade with stability and without distortions or bystanders. The existence of the paradox is due to the effect of the transfer on world capital...