Monetary Policies for an MDG-Related Scaling up of ODA to Combat HIV/AIDS: Avoiding Dutch Disease Versus Supporting Fiscal Expansion

Abstract

This Conference Paper by Matias Vernengo was presented at the “Global Conference on Gearing Macroeconomic Policies to Reverse the HIV/AIDS Epidemic”, jointly organized by UNDP’s HIV/AIDS Group and IPC and held in Brasilia, November 2006. It is part of an IPC-supported Research Programme on “Macroeconomic Policies to Combat HIV/AIDS”. The paper maintains that the monetary policies best suited to manage the macroeconomic effects of an MDG-related scaling up of HIV/AIDS financing are those that support the needed expansion of public spending - namely, monetary policies that maintain low rates of interest, increase overall liquidity in the economy and try to achieve a relatively depreciated currency.