The Economics of Post Conflict Aid

37 Pages Posted: 6 Feb 2006

See all articles by Dimitri G. Demekas

Dimitri G. Demekas

International Monetary Fund (IMF)

Jimmy McHugh

International Monetary Fund (IMF)

Dora Kosma

Athens University of Economics and Business

Date Written: November 2002

Abstract

Post conflict aid is different from conventional development aid and has different effects on the recipient economy. The paper builds a theoretical model tailored around the main stylized facts of post conflict aid and traces the impact of different kinds of post-conflict aid on capital accumulation, growth, welfare, and resource allocation. While both humanitarian and reconstruction aid are welfare-enhancing, humanitarian aid reduces long-run capital accumulation and growth. Reconstruction aid, on the other hand, may increase the long-run capital stock and, if carefully designed, avoid the pitfalls of the Dutch disease.

Keywords: aid, reconstruction, humanitarian assistance, post conflict

JEL Classification: F35, 019, 041

Suggested Citation

Demekas, Dimitri G. and McHugh, Jimmy and Kosma, Dora, The Economics of Post Conflict Aid (November 2002). Available at SSRN: https://ssrn.com/abstract=880327 or http://dx.doi.org/10.2139/ssrn.880327

Dimitri G. Demekas (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Jimmy McHugh

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Dora Kosma

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

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