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Author Sayanak, Tejashree ♦ Lahiri, Sajal
Source EconStor
Content type Text
Publisher The United Nations University World Institute for Development Economics Research (UNU-WIDER)
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword foreign aid ♦ fungibility ♦ governance ♦ welfare ♦ prize ♦ Entwicklungshilfe ♦ Good Governance ♦ Armut ♦ Armutspolitik ♦ Nash-Gleichgewicht ♦ Spieltheorie ♦ Theorie ♦ Equity, Justice, Inequality, and Other Normative Criteria and Measurement ♦ Foreign Aid
Abstract We develop a theoretical model of foreign aid to analyse a method of disbursement of aid which induces the recipient government to follow a more pro-poor policy than it otherwise would do. In our two-period model, aid is given in the second period and the volume of it depends on the level of wellbeing of the target group in the first period. We find that this way of designing aid does increase the welfare of the poor. We also consider the situations where the donor and the recipient governments act simultaneously as well as sequentially, and find that by moving first in a sequential game, the donor country can, under certain conditions, increase the welfare of the poor and its own compared to the case of simultaneous moves.
ISBN 9789292301132
Part of series WIDER Research Paper x2008/63
Learning Resource Type Article
Publisher Date 2008-01-01
Publisher Place Helsinki
Rights Holder