Aid and the fiscal and monetary responses to Dutch disease

Arbeitspapier

This study assesses the fiscal and monetary management challenges that can be associated with large inflows of foreign aid. It provides a brief overview of the literature on Dutch Disease (DD) as applied to mineral wealth and then assesses the conventional policy responses that are available to mitigate the main problems that can be caused by DD. This discussion incorporates an identification of the additional issues and transmission mechanisms that arise when the source of DD is a surge in foreign aid. This analysis is designed to illuminate the circumstances in which an aid-induced DD effect is likely to call for countervailing macroeconomic policy interventions, and when other approaches may be more appropriate. The study concludes with an empirical assessment of the relative importance of mineral-based and aid-based DD problems in low- and middle-income economies. It suggests - contrary to the mainstream literature - that foreign aid and mineral exports typically create joint macroeconomic management problems for such countries.

Object Details

• ISBN: 978-929-230-462-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2011/95

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Foreign Aid ; Fiscal and Monetary Policy in Development ; Nonrenewable Resources and Conservation: Government Policy
• Subject: Aid ; Dutch disease ; monetary policy ; fiscal policy ; Rohstoffreichtum ; Entwicklungshilfe ; Geldpolitik ; Finanzpolitik

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Roe, Alan R.
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/81016
• Last update: 10.03.2025, 11:44 AM CET