A Policymakers' Guide to Dutch Disease

Owen Barder
2006 Social Science Research Network  
It is sometimes claimed that an increase in aid might cause Dutch Disease-that is, an appreciation of the real exchange rate which can slow the growth of a country's exports-and that aid increases might thereby harm a country's long-term growth prospects. This essay argues that it is unlikely that a long-term, sustained and predictable increase in aid would, through the impact on the real exchange rate, do more harm than good, for three reasons.
doi:10.2139/ssrn.983124 fatcat:a6gx2yg64fdy5np3bes5sdtl6a