A New Aid Modality for Africa: Old Age Cash Transfers

19 Pages Posted: 11 Jan 2011

See all articles by Roy Mersland

Roy Mersland

University of Agder

Joachim Thøgersen

affiliation not provided to SSRN

Date Written: June 2010

Abstract

This paper examines the issue of foreign aid and cash transfers to individuals in low-income economies typically found in Africa. Old-age conditional cash transfers and new mobile banking technology can cope with the well-documented problems related to moral hazard and high transaction costs with such policy interactions. Cash transfers can stimulate old and retired individuals’ demand for the consumption goods and services, and thereby affect product prices and wages. Developing economies being characterised by underemployment and gross substitution between consumption and leisure, these transfers can stimulate the labour supply and increase capacity utilisation and the production of labour-intensive goods and services, triggering economic growth.

Keywords: mobile banking, foreign aid, economic growth, age-conditional transfers, overlapping generations

JEL Classification: D69, E29

Suggested Citation

Mersland, Roy and Thøgersen, Joachim, A New Aid Modality for Africa: Old Age Cash Transfers (June 2010). Available at SSRN: https://ssrn.com/abstract=1711389 or http://dx.doi.org/10.2139/ssrn.1711389

Roy Mersland (Contact Author)

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

HOME PAGE: http://www.uia.no/microfinance

Joachim Thøgersen

affiliation not provided to SSRN ( email )

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