Scandinavian Working Papers in Economics
Working Papers,
Örebro University, School of Business
No 2008:3: Aid-Financed Public Investments and the Dutch Disease: Evidence from Tanzania
Emmanuel E. Asmah () and Jorgen Levin ()
Additional contact information
Emmanuel E. Asmah: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Jorgen Levin: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Abstract: In this paper we discuss the impact of scaling-up aid in Tanzania using an economy-wide dynamic CGE model. The major conclusions coming out from this work is that productivity effects matter. If additional aid and consequently increased public spending has a positive impact on productivity this would spur GDP growth and reduce the risk of an appreciating real exchange rate. In a way this resembles previous results in the aid-growth literature that aid has a positive impact on growth in a country with good economic policies assuming that good policies have a positive impact on productivity. Presenting various scenarios on the impact of additional aid a sustained GDP growth rate of around 7 percent would be possible to achieve in a modest scaling-up aid scenario without any significant changes in the real exchange rate.
Keywords: Aid:Dutch:Disease:Tanzania
34 pages, May 14, 2008
Full text files
wp-3-2008.pdf
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