The Effects of Foreign Aid on Government Policies: Theoretical and Empirical Analyses
type: CreativeWork
description: Chapter 1 develops a two-period general equilibrium trade-theoretic model to examine if foreign aid discourages the recipient countries from pursuing trade liberalization. In the model, foreign aid is given to the recipient in period two and its amount is negatively related to the period-one real income. The recipient optimally chooses a tariff on imports. It can also choose domestic investment endogenously in period one, and this choice has an important bearing on our main result. We consider two variants of the model depending upon whether the recipient can or cannot have access to international borrowing. In the case without international borrowing, when domestic investment is exogenous, optimal tariff is zero. In contrast, when domestic investment is endogenous, optimal tariff is positive. This positive optimal tariff is induced by the link of aid negatively to the period-one real income. In the case with international borrowing, even though domestic investment is exogenous, optimal tariff is positive. But the reason for the positive tariff is its beneficial effect on an improvement in the terms-of-trade of international borrowing. When, in addition, domestic investment is endogenous, the tying of aid increases positive optimal tariffs further. Chapter 2 develops a microeconomic model of health policies and the optimal allocation of health aid in a poor recipient country. In the model, each poor household in the country chooses the optimal number of sick children taken to hospitals to maximize its lifetime utility. There are three policy options for policymakers to improve public health: raising the quality of health care, providing more preventive care and reducing the cost of health care. We examine how three policy options influence the optimal number of sick children who are medically treated. Also, the country's health authority allocates health aid for three policy options to support poor households' lifetime utility maximization. We find that more health …
abstract: Chapter 1 develops a two-period general equilibrium trade-theoretic model to examine if foreign aid discourages the recipient countries from pursuing trade liberalization. In the model, foreign aid is given to the recipient in period two and its amount is negatively related to the period-one real income. The recipient optimally chooses a tariff on imports. It can also choose domestic investment endogenously in period one, and this choice has an important bearing on our main result. We consider two variants of the model depending upon whether the recipient can or cannot have access to international borrowing. In the case without international borrowing, when domestic investment is exogenous, optimal tariff is zero. In contrast, when domestic investment is endogenous, optimal tariff is positive. This positive optimal tariff is induced by the link of aid negatively to the period-one real income. In the case with international borrowing, even though domestic investment is exogenous, optimal tariff is positive. But the reason for the positive tariff is its beneficial effect on an improvement in the terms-of-trade of international borrowing. When, in addition, domestic investment is endogenous, the tying of aid increases positive optimal tariffs further. Chapter 2 develops a microeconomic model of health policies and the optimal allocation of health aid in a poor recipient country. In the model, each poor household in the country chooses the optimal number of sick children taken to hospitals to maximize its lifetime utility. There are three policy options for policymakers to improve public health: raising the quality of health care, providing more preventive care and reducing the cost of health care. We examine how three policy options influence the optimal number of sick children who are medically treated. Also, the country's health authority allocates health aid for three policy options to support poor households' lifetime utility maximization. We find that more health …
author: Shin, Hyeon Joon
keywords: Foreign Aid, Global Health, Trade Liberalization
date published: 2014-08-01T07:00:00Z
date modified: 2026-07-24T04:34:30Z
provider: Southern Illinois University
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Southern Illinois University