Incentives for Conditional Aid Effectiveness
ISSN: 1948-1837, 2194-6353
Argitalpen urtea: 2014
Alea: 5
Zenbakia: 1
Mota: Artikulua
Beste argitalpen batzuk: Journal of Globalization and Development
Laburpena
Can sanctions against foreign aid donors enhance the credibility of conditional aid policies ? If such policies suffer from time inconsistency, the answer is positive. This paper proposes a mechanism to overcome the lack of credibility of conditional aid donations to developing countries. A scheme of policy-dependent transfers to the donor country is shown to achieve an optimal commitment outcome by improving the credibility of conditional aid programs. The scheme is devised to cover situations in which the cost of structural reforms is information privately owned by the recipient government.
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