Download or read book The Macroeconomics of Managing Increased Aid Inflows Experiences of Low Income Countries and Policy Implications written by International Monetary Fund. Policy Development and Review Dept. and published by International Monetary Fund. This book was released on 2005-08-08 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investigates the macroeconomic challenges for low-income countries created by a surge in aid inflows. It develops an analytical framework for examining possible policy responses to increased aid, and then applies this framework to the experience of five relatively well-governed countries that experienced a recent surge in aid inflows: Ethiopia, Ghana, Mozambique, Tanzania, and Uganda. Each country’s policies were supported by a PRGF arrangement during most of the period under review.

Download or read book The Short Run Macroeconomics of Aid Inflows written by Tokhir Mirzoev and published by International Monetary Fund. This book was released on 2010-03-01 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a tractable open-economy new-Keynesian model with two sectors to analyze the short-term effects of aid-financed fiscal expansions. We distinguish between spending the aid, which is under the control of the fiscal authorities, and absorbing the aid-using the aid to finance a higher current account deficit-which is influenced by the central bank's reserves policy when access to international capital markets is limited. The standard treatment of the transfer problem implicitly assumes spending equals absorption. Here, in contrast, a policy mix that results in spending but not absorbing the aid generates demand pressures and results in an increase in real interest rates. It can also lead to a temporary real depreciation if demand pressures are strong enough to threaten external balance. Certain features of low income countries, such as limited participation in domestic financial markets, make a real depreciation more likely by amplifying demand pressures when aid is spent but not absorbed. The results from our model can help understand the recent experience of Uganda, which saw an increase in government spending following a surge in aid yet experienced a real depreciation and an increase in real interest rates.

Download or read book The Macroeconomics of Medium Term Aid Scaling Up Scenarios written by Jan Gottschalk and published by International Monetary Fund. This book was released on 2010-07-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model to analyze the macroeconomic effects of a scaling-up of aid and assess the implications of different policy responses. The model features key structural characteristics of low-income countries, including varying degrees of public investment efficiency and a learning-by-doing (LBD) externality that captures Dutch disease effects. On the policy front, it distinguishes between spending the aid, which is controlled by the fiscal authority, and absorbing the aid - financing a higher current account deficit - which is influenced by the central bank's reserve accumulation policies. We calibrate the model to Uganda and run several experiments. We find that a policy mix that results in full spending and absorption of aid can generate temporary demand and real exchange rate appreciation pressures, but also have a positive effect on real GDP in the medium term, through higher public capital. Full spending with partial absorption, on the other hand, may stem appreciation pressures but can also induce adverse medium-term real GDP effects, through private sector crowding out. When aid is very inefficiently invested and there are strong LBD externalities, aid can be harmful, and partial absorption policies may be justified. But in this case, a welfare improving solution is to defer spending or - even better if possible - raise its efficiency.

Download or read book Managing Reductions in Aid Inflows Assessing Policy Choices in Haiti written by Ioana Moldovan and published by International Monetary Fund. This book was released on 2018-09-11 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: A low-income country such as Haiti that confronts an environment of diminishing aid inflows must assess tradeoffs among the available policy options: spending cuts, monetization, sales of debt, or use of foreign reserves. To provide the analytical tools for this task, the paper draws from a set of DSGE models recently developed to evaluate policy choices in low-income countries for which external aid flows represent an important revenue source. Two simplified stylized variations of the main model are used to gain intuition and initially assess the trdeaoffs. Subsequenctly a full-scale small open economy DSGE model, calibrated to match conditions in Haiti and in similar low-income countries, is employed. Several key results are common to all model versions. While sales of foreign exchange reserves can compensate for the loss of aid inflows, this strategy is not sustainable. The remaining policy choices entail larger welfare costs, involving lower consumption levels and real depreciation. The results suggest that a mixture of spending cuts and depreciation is the best strategy, when use of foreign reserves is constrained.

Download or read book The Macroeconomics of Scaling Up Aid written by Mr.Andrew Berg and published by IMF. This book was released on 2007-03-23 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study analyzes key issues associated with large increases in aid, including absorptive capacity, Dutch disease, and inflation. The authors develop a framework that emphasizes the different roles of monetary and fiscal policy and apply it to the recent experience of five countries: Ethiopia, Ghana, Mozambique, Tanzania, and Uganda. These countries have often found it difficult to coordinate monetary and fiscal policy in the face of conflicting objectives, notably to spend the aid money on domestic goods and to avoid excessive exchange rate appreciation.

Download or read book Evolving Monetary Policy Frameworks in Low Income and Other Developing Countries written by International Monetary Fund and published by International Monetary Fund. This book was released on 2015-10-23 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past two decades, many low- and lower-middle income countries (LLMICs) have improved control over fiscal policy, liberalized and deepened financial markets, and stabilized inflation at moderate levels. Monetary policy frameworks that have helped achieve these ends are being challenged by continued financial development and increased exposure to global capital markets. Many policymakers aspire to move beyond the basics of stability to implement monetary policy frameworks that better anchor inflation and promote macroeconomic stability and growth. Many of these LLMICs are thus considering and implementing improvements to their monetary policy frameworks. The recent successes of some LLMICs and the experiences of emerging and advanced economies, both early in their policy modernization process and following the global financial crisis, are valuable in identifying desirable features of such frameworks. This paper draws on those lessons to provide guidance on key elements of effective monetary policy frameworks for LLMICs.

Download or read book The Macroeconomic Management of Foreign Aid written by Mr.Peter Isard and published by International Monetary Fund. This book was released on 2006-04-21 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the adoption of the Milennium Development Goals (MDGs) in 2000, the challenge of reducing poverty around the world has been more prominent on the agenda of the international community. Relatively slow progress toward meeting the MDGs by the 2015 target date has added to the urgency of this effort. Two influential reports - The United Nations Millennium Project Report (the "Sachs Report") and the Commission for Africa Report (the "Blair Report") envisage substantial increases in aid flows to poor countries, especially to countries in sub-Saharan Africa. The International community sees increases in aid, along with improvements in recipient policies and freer global trade, as necessary for global prosperity and poverty reduction.

Download or read book Fiscal Adjustment for Stability and Growth written by Mr.James Daniel and published by International Monetary Fund. This book was released on 2006-08-17 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: The pamphlet (which updates the 1995 Guidelines for Fiscal Adjustment) presents the IMF’s approach to fiscal adjustment, and focuses on the role that sound government finances play in promoting macroeconomic stability and growth. Structured around five practical questions—when to adjust, how to assess the fiscal position, what makes for successful adjustment, how to carry out adjustment, and which institutions can help—it covers topics such as tax policies, debt sustainability, fiscal responsibility laws, and transparency.

Download or read book Aid and Growth at the Regional Level written by Axel Dreher and published by International Monetary Fund. This book was released on 2015-09-03 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper brings the aid effectiveness debate to the sub-national level. We hypothesize the nonrobust results regarding the effects of aid on development in the previous literature to arise due to the effects of aid being insufficiently large to measurably affect aggregate outcomes. Using geocoded data for World Bank aid to a maximum of 2,221 first-level administrative regions (ADM1) and 54,167 second-level administrative regions (ADM2) in 130 countries over the 2000-2011 period, we test whether aid affects development, measured as nighttime light growth. Our preferred identification strategy exploits variation arising from interacting a variable that indicates whether or not a country has passed the threshold for receiving IDA's concessional aid with a recipient region's probability to receive aid, in a sample of 478 ADM1 regions and almost 8,400 ADM2 regions from 21 countries. Controlling for the levels of the interacted variables, the interaction provides a powerful and excludable instrument. Overall, we find significant correlations between aid and growth in ADM2 regions, but no causal effects.

Download or read book Managing Capital Flows written by Masahiro Kawai and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.

Download or read book Inflation Targeting and Exchange Rate Management In Less Developed Countries written by Mr. Marco Airaudo and published by International Monetary Fund. This book was released on 2016-03-08 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.

Download or read book Foreign Aid Debt and Growth in Zambia written by Per-Åke Andersson and published by Nordic Africa Institute. This book was released on 2000 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt: A study which discusses the structural problems in Zambia and the policies of adjustment that have been tried. It also analyses the impact of various strategies with regard to external resource transfers. The results show that the scope for growth is highly dependent on the tightness of the external resource constraint, and that debt service tends to dominate the policy-making.

Download or read book The Short Run Macroeconomic Impact of Foreign Aid to Small States written by Derek Headey and published by Intl Food Policy Res Inst. This book was released on 2010 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Fiscal Policy and Long Term Growth written by International Monetary Fund and published by International Monetary Fund. This book was released on 2015-04-20 with total page 257 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores how fiscal policy can affect medium- to long-term growth. It identifies the main channels through which fiscal policy can influence growth and distills practical lessons for policymakers. The particular mix of policy measures, however, will depend on country-specific conditions, capacities, and preferences. The paper draws on the Fund’s extensive technical assistance on fiscal reforms as well as several analytical studies, including a novel approach for country studies, a statistical analysis of growth accelerations following fiscal reforms, and simulations of an endogenous growth model.

Download or read book Review of PRGF Program Design Overview written by International Monetary Fund. Policy Development and Review Dept. and published by International Monetary Fund. This book was released on 2005-08-08 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Part of the Fund’s periodic reviews of its policy advice to member countries, and responds to calls by Executive Directors for further staff analysis on improving the design of such programs. In the context of the recent discussions on the design of the broad range of Fund-supported programs, Directors also requested more in-depth analytical studies of disaggregated and homogenous groups, as well as a closer look at how progress towards external viability in low-income countries (LICs) can be improved. The review also seeks to address these requests.

Download or read book Policy Matters written by Jose Antonio Ocampo and published by Zed Books. This book was released on 2007-03 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 2000, UN member states pledged to halve world poverty by 2015, among other Millennium Development Goals (MDG's). But progress has been elusive since. The chapters in this volume address disparate problems in achieving the UN Development Agenda, from the complex effects of trade and financial liberalisation to the realities of development aid, itself a central pillar of the MDGs. The unifying theme is one of economic and social integration, and an emphasis on long-term strategic investments in education, health and infrastructure.

Download or read book Macroeconomic Consequences of Remittances written by Connel Fullenkamp and published by International Monetary Fund. This book was released on 2008-03-11 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: Given the large size of aggregate remittance flows (billions of dollars annually), they should be expected to have significant macroeconomic effects on the economies that receive them. This paper directly addresses the two main issues of interest to policymakers with regard to remittances--how to manage their macroeconomic effects, and how to harness their development potential--by reporting the results of the first global study of the comprehensive macroeconomic effects of remittances on recipient economies. In broad terms, the findings of this paper tend to confirm the main benefit cited in the microeconomic literature: remittances improve households' welfare by lifting families out of poverty and insuring them against income shocks. The findings also yield a number of important caveats and policy considerations, however, that have largely been overlooked. The main challenge for policymakers in countries that receive significant flows of remittances is to design policies that promote remittances and increase their benefits while mitigating adverse side effects. Getting these policy prescriptions correct early on is imperative. Globalization and the aging of developed economy populations will ensure that demand for migrant workers remains robust for years to come. Hence, the volume of remittances likely will continue to grow, and with it, the challenge of unlocking the maximum societal benefit from these transfers.