Impact of Aid and Public Spending—A Macro–micro Framework
In this study, we have used Tanzania as a case to illustrate how a simulation model can be used to evaluate the impact of aid and the trade-offs between public spending categories and their impact on income poverty and other social development targets.
Our results suggest the following. First, under plausible growth, fiscal and foreign assistance assumptions, in line with observed patterns, the enormous difficulty of achieving most millennium development goals (MDGs) by 2015 is evident. Second, there existed trade-offs between the various MDGs, in particular between achievements for poverty and other social development targets.