Series: IMF Working Papers
Author(s): Ioana Moldovan , Shu-Chun Susan Yang , and Luis-Felipe Zanna
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 11 June 2019
Keywords: Absorptive capacity, Private consumption, Real interest rates, Government consumption, Public goods, aid, fiscal policy, foreign exchange intervention, optimal policy, low-income countries.
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 lo...