We study the role of the exchange rate regime, reserve accumulation, and sterilization policies in the macroeconomics of aid surges. Absent sterilization, a peg allows for almost full aid absorption — an increase in the current account deficit net of aid — delivering the same effects as...

This study assesses the fiscal and monetary management challenges that can be associated with large inflows of foreign aid. It provides a brief overview of the literature on Dutch Disease (DD) as applied to mineral wealth and then assesses the conventional policy responses that are available to...

We examine the properties of alternative monetary policy rules in response to large aid surges in low-income countries characterized by incomplete capital market integration and currency substitution. Using a dynamic stochastic general equilibrium model, we show that simple monetary rules that...

This paper investigates the macroeconomic challenges created by a surge in aid inflows. It develops an analytical framework for examining possible policy responses to increased aid, in terms of absorption and spending of aid - where the central bank controls absorption through monetary policy...

This paper surveys the economic literature on the scaling-up of aid to Africa. It provides a checklist of issues that need to be considered when preparing a long term macroeconomic projection for a country involving the assumption of a significant increase in aid. Such scaling-up scenarios are...

This book, edited by J.B. Zulu, Ian S. McCarthy, Susana Almuiña, and Gabriel Sensenbrenner, presents the proceedings of the special Joint Meetings on Central Banking Technical Assistance held in St. Petersburg, Russia in 1994, and provides detailed information on important issues in central...