Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/65426 
Year of Publication: 
2012
Series/Report no.: 
CREDIT Research Paper No. 12/02
Publisher: 
The University of Nottingham, Centre for Research in Economic Development and International Trade (CREDIT), Nottingham
Abstract: 
International aid has an ambiguous effect on the macro-economy of the recipient country. To the extent that aid raises consumer expenditure, there will be some real exchange rate appreciation and a shift of resources away from traded goods production and into non-traded goods production. However, aid for investment in the traded goods sector can mitigate this effect. Also, a relatively high level of productivity in the non-traded goods sector combined with a high level of investment will tend to depreciate the real exchange rate. We examine aid inflows in 26 Sub-Saharan African countries, and find a variety of macro-economic responses. Some of the variation in the responses can be explained by variation in observable country characteristics; this has implications for donor policy.
Subjects: 
Aid
Dutch Disease
Africa
JEL: 
F41
O56
Document Type: 
Working Paper

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