Contemporary policy debates on the macroeconomics of aid often concentrate on short-run Dutch disease effects, ignoring the possible supply model of aid and public expenditure in which public infrastructure capital generates an inter-temporal productivity spill over for both tradable and...

We show that a combination of temporariness and spending pressure is intrinsic to the aid relationship.  In our analysis, recipients rationally discount the pronouncements of donors about the duration of their commitments because in equilibrium they know that some donors will honor those...

In the vast majority of low-income countries, financing and political constraints have traditionally impaired the usefulness of fiscal policy as a short-run stabilization device. Indeed, it is widely recognized that fiscal policy in such countries has very often tended to be pro-cyclical. While...

This report considers alternative exchange rate arrangements for EAC countries in the transition to a monetary union.  Four main considerations shape our analysis.  First, while existing exchange rate policies differ in some important ways across the EAC, the Partner States have expressed a...

Real-time, quasi-real, `nearly real` and full sample output gaps for the UK, generated by linear and quadratic, Hodrick-Prescott filter and unobserved components (UC-ARIMA) techniques, are presented and analysed. Particular attention is paid to the behaviour of the different series during the...

Contemporary policy debates on the macroeconomics of aid often concentrate on short run Dutch disease effects, ignoring the possible supply side impact of aid financed public expenditure. We present a simple model of aid and public expenditure in which public infrastructure generates an...

We focus on the management of highly persistent shocks to aid flows, including HIPC or MDG-related increases in net flows, in the presence of currency substitution by the domestic private sector. Such shocks have beneficient long-run effects, but when currency substitution is high they can...