This paper examines the welfare effects of international income transfers in a two-country, two-good model with transboundary pollution. Most existing studies have assumed that pollution negatively affects the consumer's utility function instead of influencing production. In our model, there is...

We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable...

We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable...

We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable...

The paper presents a theoretical and empirical analysis of a donor's choice of the composition of unrestricted and in-kind/restricted transfers to a recipient and how this composition is adjusted in response to changes in the moral hazard behavior of the recipient. In-kind or restricted...

In this paper, foreign aid transfers can distort individual incentives, and hence hurt growth, by encouraging rent-seeking as opposed to productive activities. We construct a model of a small growing open economy that distinguishes two effects from foreign transfers: (i) a direct positive...

International donors usually have particular goals they want to achieve with their foreign aid, for example, poverty alleviation. In the international aid story lobbying by potential recipient groups attempting to capture the donor's support play a potentially important role for nongovernmental...

Theoretical models predict that countries with unchanged long-run savings preferences will respond to debt relief by running up new debts or by running down assets. And there are some signs that incremental debt relief over the past two decades has fulfilled those predictions. Debt relief is...

We examine how foreign aid can be used to induce a recipient country to engage in trade-policy reforms. First, we develop a two-country and two-period theoretical model where the donor's promise of aid in period 2 depends on the recipient's chosen tariff in period 1. Without aid, optimal tariff...

“Reduced emissions from deforestation and forest degradation” (REDD) is emerging as a major new climate change mechanism that could deeply impact the financial, social and institutional dynamics of deforestation, conservation, and development in many developing countries. It has the...