Complementarities between Grants and Loans

• Tác giả: Atsushi Iimi
• Ngôn ngữ: eng
• Ký hiệu phân loại: 332.3 Credit and loan institutions
• Thông tin xuất bản: 2012
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 307976
• Chủ đề: 1. Fiscal and Monetary Policy in Development O230; 2. Foreign Aid F350; 3. International Linkages to Development; 4. National Government Expenditures and Related Policies: General H500; 5. Role of International Organizations O190

Tóm tắt

A debate has emerged over the optimal delivery of official development assistance (ODA) to developing countries: through grants or through concessional loans. While some countries such as Japan provide aid through loans, other countries tend to rely on grants. An endogenous growth model is considered, in which public spending is financed through aid and the donor community can influence a recipient country's growth path by choosing a combination of grants and loans. Empirically, it is found that an increase in the concessionality attached to ODA loans can facilitate recipient countries' economic development. It is also found that grants and loans are complementary with an optimal grant-loan ratio of 1 to 0.2-0.4, depending on the specifications.