01869cas a2200277 a 4500 AALejournalIMF008827 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451861389 1018-5941 BD-DhAAL BD-DhAAL Lane, Timothy. The Dynamic Implications of Foreign Aid and Its Variability / Timothy Lane, Leslie Lipschitz, Cristina Arellano, Ales Bulir. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (41 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper examines the effects of aid and its volatility on consumption, investment, and the structure of production in the context of an intertemporal two-sector general equilibrium model. A permanent flow of aid finances mainly consumption, a result consistent with the historical failure of aid inflows to translate into sustained growth. Shocks to aid are reflected mainly in investment fluctuations, as a result of consumption smoothing. Aid shocks result in substantial welfare losses, suggesting that aid variability should be taken into account in designing aid architecture. These results are consistent with the evidence from cross-country regressions of manufactured exports. Mode of access: Internet Arellano, Cristina. Bulir, Ales. Lipschitz, Leslie. IMF Working Papers; Working Paper ; No. 2005/119 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/119/001.2005.issue-119-en.xml IMF e-Library