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Abstract

This paper examines the sensitivity of quantitative assessments of foreign aid on the level of income and its distribution across income groups to alternative modelling and parametric assumptions. It does so with the use of a computable general equilibrium model for Egypt by subjecting the model to alternative assumptions. Although the results are (as expected) sensitive to the assumptions made, they indicate that at least potentially, as for example, when foreign aid takes an appropriate form and is accompanied by appropriate offsetting policies, it can be a useful tool for achieving development at minimum social cost.

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