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Aid Tied To The Donor'S Exports

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  • Murray C. Kemp

Abstract

. The existing theory of tied aid presupposes that trade and aid are conducted in terms of private consumption goods. However, in such a world aid can be effectively tied only if the recipient government somehow prevents its households from reselling the aid basket on world markets. That weakness of existing theory is here removed by extending the theory to accommodate non‐tradable public consumption goods. The most striking result of existing theory – that, even in a world of just two trading countries, the donor might benefit and the recipient suffer from the tying of aid – is preserved.

Suggested Citation

  • Murray C. Kemp, 2005. "Aid Tied To The Donor'S Exports," Pacific Economic Review, Wiley Blackwell, vol. 10(3), pages 317-322, October.
    • Handle: RePEc:bla:pacecr:v:10:y:2005:i:3:p:317-322
    DOI: 10.1111/j.1468-0106.2005.00275.x
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    Cited by:

    1. Liu, Xiangbo & Zhang, Xiaomeng & Chao, Chi-Chur, 2014. "Foreign aid, leisure–effort choice, and economic growth," Economic Modelling, Elsevier, vol. 43(C), pages 435-438.

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