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Post-Conflict Aid, Real Exchange Rate Adjustment, and Catch-Up Growth / Schmidt-Hebbel, Klaus
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Schmidt-Hebbel, Klaus
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Absorptive Capacities.
- Assets.
- Conflict and Development.
- Currencies and Exchange Rates.
- Current Account.
- Debt Markets.
- Depreciation.
- Development Economics and Aid Effectiveness.
- Domestic-Currency.
- Dutch Disease.
- Economic Conditions and Volatility.
- Economic Growth.
- Economic Theory and Research.
- Economies.
- Economy.
- Emerging Markets.
- Equilibrium.
- Equilibrium Level.
- Export Diversification.
- Export Growth.
- Finance and Financial Sector Development.
- Macroeconomic Management.
- Macroeconomics and Economic Growth.
- Misalignment.
- Overvaluation.
- Post Conflict Reconstruction.
- Poverty Reduction.
- Private Sector Development.
- Pro-Poor Growth.
- Real Exchange Rate.
- Real Exchange Rate Appreciation.
- Real Exchange Rate Overvaluation.
- Relative Price.
- Risks.
- Social Conflict and Violence.
- Social Development.
- Local Subjects:
- Absorptive Capacities.
- Assets.
- Conflict and Development.
- Currencies and Exchange Rates.
- Current Account.
- Debt Markets.
- Depreciation.
- Development Economics and Aid Effectiveness.
- Domestic-Currency.
- Dutch Disease.
- Economic Conditions and Volatility.
- Economic Growth.
- Economic Theory and Research.
- Economies.
- Economy.
- Emerging Markets.
- Equilibrium.
- Equilibrium Level.
- Export Diversification.
- Export Growth.
- Finance and Financial Sector Development.
- Macroeconomic Management.
- Macroeconomics and Economic Growth.
- Misalignment.
- Overvaluation.
- Post Conflict Reconstruction.
- Poverty Reduction.
- Private Sector Development.
- Pro-Poor Growth.
- Real Exchange Rate.
- Real Exchange Rate Appreciation.
- Real Exchange Rate Overvaluation.
- Relative Price.
- Risks.
- Social Conflict and Violence.
- Social Development.
- Physical Description:
- 1 online resource (44 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2007
- System Details:
- data file
- Summary:
- Post-conflict countries receive substantial aid flows after the start of peace. While post-conflict countries' capacity to absorb aid (that is, the quality of their policies and institutions) is built up only gradually after the onset of peace, the evidence suggests that aid tends to peak immediately after peace is attained and decline thereafter. Aid composition broadly reflects post-conflict priorities, with large parts of aid financing social expenditure and infrastructure investment. Aid has significant short-term effects on the real exchange rate (RER), as inferred from the behavior of RER in the world. While moderate RER overvaluation is observed in post-conflicts, it cannot be traced down to the aid flows. The empirical evidence on world growth reveals new findings about the pattern of catch-up growth during post-conflicts and the role of key growth determinants on post-conflict growth. Aid is an important determinant of growth, both generally and more strongly during post-conflict periods. Because RER misalignment reduces growth, RER overvaluation during post-conflicts reduces catch-up growth. Aid and RER overvaluation combined also lower growth. But the negative growth effect of RER overvaluation declines with financial development.
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