This paper reviews the various measures which have been used in the recent literature to assess how well donors allocate their aid across countries. We begin by proposing three desirable criteria for a measure of allocative performance, which make limited assumptions. We then show that all...

There are genuine concerns that foreign aid may crowd out domestic tax revenue. In the short run this would have negative consequences for the recipient government's revenue, and over a longer period could corrode governance through breaking the social contract. In recent years, two papers have...

Charitable giving has increasingly become ‘tough love’ - it has come to require recipients to undertake costly prior action. A common justification is that of greater efficiency: willingness to undertake costly actions signals greater productivity from transfers. However, there is a...

Lenders condition future loans on some index of past performance. Typically, banks condition future loans on repayments of earlier obligations while international organizations condition future loans on the implementation of some policy conditions. We build an agency model that accounts for...

Lenders condition future loans on some index of past performance. Typically, banks condition future loans on repayments of earlier obligations whilst international organizations (official lenders) condition future loans on the implementation of some policy action ('investment'). We build an...

It is clear from the implications of growth theory that the impact of aid depends on how it affects savings, investment and government behaviour. In respect of low-income countries, which are the principal aid recipients and the economies for which the issue of the impact of aid on growth is...