The Macroeconomics of Scaling Up Aid: Lessons from Recent Experience

By Andrew Berg, Mumtaz Hussain, Shaun K. Roache, Amber A Mahone, Tokhir N Mirzoev, Shekhar Aiyar

March 23, 2007

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Andrew Berg, Mumtaz Hussain, Shaun K. Roache, Amber A Mahone, Tokhir N Mirzoev, and Shekhar Aiyar. The Macroeconomics of Scaling Up Aid: Lessons from Recent Experience, (USA: International Monetary Fund, 2007) accessed November 22, 2024

Summary

This study analyzes key issues associated with large increases in aid, including absorptive capacity, Dutch disease, and inflation. The authors develop a framework that emphasizes the different roles of monetary and fiscal policy and apply it to the recent experience of five countries: Ethiopia, Ghana, Mozambique, Tanzania, and Uganda. These countries have often found it difficult to coordinate monetary and fiscal policy in the face of conflicting objectives, notably to spend the aid money on domestic goods and to avoid excessive exchange rate appreciation.

Subject: Expenditure, Financial institutions, Foreign exchange, Inflation, Monetary base, Money, Prices, Real exchange rates, Treasury bills and bonds

Keywords: Africa, Currency depreciation, Deficit, Depreciation, Exchange rate appreciation, Inflation, Monetary base, Nominal exchange rate, OP, Real exchange rates, Terms-of-trade shock, Treasury bill sale, Treasury bills and bonds

Publication Details

Pages:

114
Volume:

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DOI:

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Issue:

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Series:

Occasional Paper No. 2007/002
Stock No:

S253EA
ISBN:

9781589065918
ISSN:

0251-6365

Supplemental Resources

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