01894cas a2200265 a 4500 AALejournalIMF019198 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498312110 1018-5941 BD-DhAAL BD-DhAAL Moldovan, Ioana. Optimal Fiscal Spending and Reserve Accumulation Policies under Volatile Aid / Ioana Moldovan, Shu-Chun Susan Yang, Luis-Felipe Zanna. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (45 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 This paper assesses the optimal setting of fiscal spending and foreign exchange rate intervention policies in response to volatile foreign aid, in a small open economy model that incorporates typical features of low-income countries. Within a class of policy rules, it jointly considers the optimal aid spending and international reserve accumulation policies. The results show that it is optimal to adjust government spending gradually in response to unpredictable fluctuations in aid, while partially accumulating foreign exchange reserves to offset Dutch disease effects. Also, allocating relatively more of the government spending to productive public investment, and less to government consumption, is welfare improving. Mode of access: Internet Susan Yang, Shu-Chun. Zanna, Luis-Felipe. IMF Working Papers; Working Paper ; No. 2019/126 Full text available on IMF http://elibrary.imf.org/view/journals/001/2019/126/001.2019.issue-126-en.xml IMF e-Library