This study explores a basic idea in political economy: Trading money for political influence. Our focus is at the level of international institutions, where governments may exploit their influence in one organization to gain leverage over another. In particular, we consider the lending...

We show how major shareholders can exploit their power over international organizations to hide their foreign-policy interventions from domestic audiences. We argue that major powers exert influence bilaterally when domestic audiences view the intervention favorably. When domestic audiences are...

This study explores a basic idea in political economy: trading money for political influence. Our focus is at the level of international institutions, where governments may exploit their influence in one organization to gain leverage over another. In particular, we consider the lending...

At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals...

This paper analyzes optimal foreign aid policy in a neoclassical framework with a conflict of interest between the donor and the recipient government. Aid conditionality is modelled as a limited enforceable contract. We define conditional aid policy to be self-enforcing if, at any point in time,...

Past research on aid and growth is flawed because it typically examines the impact of aggregate aid on growth over a short period, usually four years, while significant portions of aid are unlikely to affect growth in such a brief time. We divide aid into three categories: (1) emergency and...

We model the aid allocation decision where the donor government has announced that good governance is the criterion for receiving aid. Potential recipients must compete for the aid funds. The structure of the competition is important to the donor in terms of achieving good governance, and to the...

We develop a theoretical model showing that countercyclical transfers from a wealthy donor to a poorer recipient generate a signal of altruistic donor motivation. Using OECD foreign aid (ODA) data we find the signal present in approximately one-sixth of a large set of donor-recipient pairs. We...

This paper analyses the decentralization of decisionmaking in aid-giving in a theoretical rent-seeking framework. In this analysis the root donor establishes a necessary criterion for potential recipients: good governance. The potential recipients compete in hierarchal contests for funds. The...

Much public discussion about foreign aid has focused on whether and how to increase its quantity. But recently aid quality has come to the fore, by which is meant the efficiency of the aid delivery process. This paper focuses on one process problem, the proliferation of aid projects and the...