Arbeitspapier

Aid and the fiscal and monetary responses to Dutch disease

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.

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

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

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

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

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Roe, Alan R.
  • The United Nations University World Institute for Development Economics Research (UNU-WIDER)

Time of origin

  • 2011

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