Welfare effects of aid under quantitative trade restrictions

Lahiri, Sajal & Raimondos, Pascalis (1995) Welfare effects of aid under quantitative trade restrictions. Journal of International Economics, 39(3-4), pp. 297-315.

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Abstract

The paper examines the effects of tied-aid on the welfare of both the donor and the recipient countries. We depart from the previous literature by assuming preexistence of quantitative trade distortions. To mitigate these distortions the donor country provides aid that is tied to the rationed good. Conditions for the presence of the transfer paradox and of the enrichment of both countries are derived and interpreted under the stability of the system. Furthermore, we show that whereas untied aid cannot increase global welfare, tied-aid unambiguously does so.

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ID Code: 94045
Item Type: Journal Article
Refereed: Yes
Keywords: Tied-aid; Quotas; Welfare
DOI: 10.1016/0022-1996(95)01374-2
ISSN: 0022-1996
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 1995 Elsevier Science B.V.
Deposited On: 21 Mar 2016 23:38
Last Modified: 21 Mar 2016 23:38

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