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- Title
On foreign aid, pollution and abatement.
- Authors
Oladi, Reza; Beladi, Hamid
- Abstract
This paper provides a Ricardian general equilibrium model to study the effect of foreign aid aimed at abating pollution in a small southern recipient economy. The government faces a dynamic problem as it chooses the emission level and abates pollution. The stock of pollution damages consumers and its law of motion is influenced by emission level and the stock of pollution as well as the level of abatement. We show that such type of aid increases emissions, but its effect on pollution stock is ambiguous in the absence of trade. With trade, aid reduces both pollution and emissions given that the recipient country has comparative advantage in the pollution-intensive good. Moreover, such type of aid can be immiserizing with or without trade.
- Subjects
INTERNATIONAL economic assistance; POLLUTION prevention; ABATEMENT (Atmospheric chemistry); RICARDIAN equivalence theorem; ENVIRONMENTAL economics
- Publication
Environment & Development Economics, 2015, Vol 20, Issue 6, p797
- ISSN
1355-770X
- Publication type
Article
- DOI
10.1017/S1355770X15000066