The paper examines the effects of aid and its volatility on consumption, investment, and the structure of production in the context of an intertemporal two-sector general equilibrium model. A permanent flow of aid finances mainly consumption, a result consistent with the historical failure of...

The paper examines the effects of aid and its volatility on consumption, investment, and the structure of production in the context of an intertemporal two-sector general equilibrium model. A permanent flow of aid finances mainly consumption, a result consistent with the historical failure of...

The papers in this volume address a range of relevant issues: • The relationship between aid, growth, and poverty reduction. • The potential for sizable increases in aid to adversely affect competitiveness, and how to avoid this. • Concerns that aid flows that are volatile, unpredictable,...

This paper models alternative policy responses to various sorts of disturbances-or "shocks"-to the steady-state path of a developing economy. Its objective is to arrive at some generalizations about appropriate credit and exchange rate policies. (One result, for example, focuses on the folly of...