Charles Explorer logo
🇬🇧

Tradeoffs of foreign assistance for the weakest-link global public goods

Publication |
2011

Abstract

We analyze how foreign assistance affects the donor and recipient countries, accounting for discontinuities and non-monotonicities originating from switches between structurally different equilibrium profiles. We show that voluntary foreign assistance improves provision of the public good and also welfare, but makes the donor country worse off for the medium level of income inequality.