The aid effectiveness principles have limits if the recipient is fragile. The problem of relevance exists if the recipient has an authoritarian or totalitarian regime. In situations of weak statehood and fragility, a large portion of aid would likely bypass the state because of high demand for...

This paper investigates the macroeconomic challenges created by a surge in aid inflows. It develops an analytical framework for examining possible policy responses to increased aid, in terms of absorption and spending of aid - where the central bank controls absorption through monetary policy...

Controversy over the aggregate impact of foreign aid has focused on reduced form estimates of the aid-growth link. The causal chain, through which aid affects developmental outcomes including growth, has received much less attention. We address this gap by: (i) specifying a structural model of...