Grants Versus Loans Hulya Ulku

ISBN: 9786613799227

Published: September 1st 2004

ebook

64 pages


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Grants Versus Loans  by  Hulya Ulku

Grants Versus Loans by Hulya Ulku
September 1st 2004 | ebook | PDF, EPUB, FB2, DjVu, audiobook, mp3, ZIP | 64 pages | ISBN: 9786613799227 | 4.27 Mb

Under what conditions should grants be preferred to loans? To answer this question, we present a simple model la Krugman (1988) and show that, for any given level of developmental assistance, the optimal degree of loan concessionality is positivelyMoreUnder what conditions should grants be preferred to loans?

To answer this question, we present a simple model la Krugman (1988) and show that, for any given level of developmental assistance, the optimal degree of loan concessionality is positively associated with economic growth if countries are poor, have bad policies, and high debt obligations. We then test our model by estimating a modified growth model for a panel of developing countries, and find evidence supporting our predictions.

Finally, we assess the determinants of current aid allocations and find that the degree of concessionality is negatively correlated with countries levels of development.



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