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Tied Aid Revisited: A Reexamination of the Kemp-Kojima Results in the Presence of Environmental Externalities

Author

Listed:
  • Takumi Haibara

    (Graduate School of International Cooperation Studies (GSICS); Kobe University, Japan)

Abstract

Tied aid invites a Pareto-improving situation in the presence of environmental externalities. Under certain conditions, although the aid recipient government's marginal propensity to consume the purchased good is lower or higher than the corresponding marginal propensity of the aid recipient individuals, the welfare of both the donor and the recipient improves in the presence of production- or consumption-based pollution. This result counters the conventional wisdom of tied aid presented by Kemp and Kojima (1985).

Suggested Citation

  • Takumi Haibara, 2006. "Tied Aid Revisited: A Reexamination of the Kemp-Kojima Results in the Presence of Environmental Externalities," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 41(2), pages 195-207, December.
    • Handle: RePEc:dse:indecr:v:41:y:2005:i:2:p:195-207
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    Cited by:

    1. Alain-Désiré Nimubona & Horatiu Rus, 2015. "Green Technology Transfers and Border Tax Adjustments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 189-206, September.

    More about this item

    Keywords

    Tied aid; Production-based pollution; Consumption-based pollution; Terms of trade;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F35 - International Economics - - International Finance - - - Foreign Aid

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