The Economics of Post Conflict Aid

37 Pages Posted: 6 Feb 2006

See all articles by Dimitri G. Demekas

Dimitri G. Demekas

School of Public Policy, LSE; International Finance Corporation, World Bank Group

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). IMF Working Paper No. 02/198, Available at SSRN: https://ssrn.com/abstract=880327

Dimitri G. Demekas (Contact Author)

School of Public Policy, LSE ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

International Finance Corporation, World Bank Group

1818 H Street NW
Washington, DC 20433
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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