Abstract
A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.
| Original language | English |
|---|---|
| Pages (from-to) | 216-231 |
| Number of pages | 16 |
| Journal | Japanese Economic Review |
| Volume | 63 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2012 Jun |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Aid for trade and welfare. / Naito, Takumi.
In: Japanese Economic Review, Vol. 63, No. 2, 06.2012, p. 216-231.Research output: Contribution to journal › Article
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TY - JOUR
T1 - Aid for trade and welfare
AU - Naito, Takumi
PY - 2012/6
Y1 - 2012/6
N2 - A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.
AB - A new foreign aid initiative called Aid for Trade is intended to improve a recipient's trade-related infrastructure which lowers its trade costs. We formulate a two-country, continuum-good Ricardian model, where each country's transport cost is inversely related to its effective public services which are subject to congestion. Our numerical experiments show that an increase in the donor's aid/GDP ratio within a certain range raises welfare in both countries if the recipient's relative income tax rate is sufficiently small.
UR - http://www.scopus.com/inward/record.url?scp=84861461112&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84861461112&partnerID=8YFLogxK
U2 - 10.1111/j.1468-5876.2012.00569.x
DO - 10.1111/j.1468-5876.2012.00569.x
M3 - Article
AN - SCOPUS:84861461112
VL - 63
SP - 216
EP - 231
JO - Japanese Economic Review
JF - Japanese Economic Review
SN - 1352-4739
IS - 2
ER -