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Abstract
This paper studies the relevance of agricultural policies for avoiding Dutch
Disease, which affects many less developed countries experiencing a resource boom.
Using a computable general equilibrium model calibrated for Chad, we study the impact
of using this country’s annual oil revenue for public investment, particularly in the
development of road and irrigation infrastructure. Our model takes into account the
integration of markets and migration processes. We find that improving water access
would reduce Chad’s dependence on food aid and entail a substantial improvement in
rural household welfare.