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 beused to evaluate the impact of aid and the trade-offs between public spending categories and theirimpact 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 observedpatterns, the enormous difficulty of achieving most millennium development goals (MDGs) by2015 is evident. Second, there existed trade-offs between the various MDGs, in particular betweenachievements for poverty and other social development targets.