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Working paper

Aid and fiscal instability

Abstract:

We show that a combination of temporariness and spending pressure is intrinsic to the aid relationship. In our analysis, recipients rationally discount the pronouncements of donors about the duration of their commitments because in equilibrium they know that some donors will honor those commitments while others will not. Donor types pool in equilibrium; in sharp contrast to conventional signaling situations, there is no separating equilibrium in pure strategies. Moreover, pooling necessarily ...

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Publication status:
Published
Peer review status:
Not peer reviewed

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Institution:
Swarthmore College
Role:
Author
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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Research group:
Development economics
Oxford college:
St Cross College
Role:
Author
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Institution:
Indiana University
Role:
Author
Series:
CSAE working paper series
Place of publication:
http://www.csae.ox.ac.uk/workingpapers/main-wps.html
Publication date:
2008-01-01
Language:
English
Subjects:
UUID:
uuid:322dd444-306a-4f88-8835-b055fd725cbe
Local pid:
ora:2547
Deposit date:
2009-01-23

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