This paper presents a dynamic macroeconomic model that captures key linkages between foreign aid, public investment, growth, and poverty. Public capital is disaggregated into education, core infrastructure, and health. Dutch disease effects associated with aid are accounted for by endogenizing...

This paper extends the dynamic macroeconomic framework developed by Agenor et al. [Agenor, P.-R., Bayraktar, N., & Aynaoui, K. E. (2006, July). Roads out of Poverty? Assessing the Links between Aid, Public Capital, Growth, and Poverty Reduction. World Bank, Revised.]. As in the original model,...

Agenor, Bayraktar, and El Aynaoui develop a macroeconomic framework that captures links between aid, public investment, growth, and poverty. Public investment is disaggregated into education, infrastructure, and health, and affects both aggregate supply and demand. Dutch disease effects are...