Contents -- I. INTRODUCTION -- II. THE MODEL -- III. PARTIAL AND GENERAL EQUILIBRIUM EFFECTS OF FOREIGN AID AND MACROECONOMIC POLICY -- IV. THE OPTIMAL TIMING OF AID AND MACROECONOMIC POLICY -- V. THE EFFECTIVENESS OF MACROECONOMIC POLICIES IN AID-RECEIVING COUNTRIES -- VI. CONCLUSIONS -- Appendix I. Solution Strategy -- Appendix II-a. Managed Float Regimes -- Appendix II-b. General Equilibrium Effect of Front-Loading Aid with LBD Externalities -- Appendix III. Pseudo First Stage of System GMM Panel Regressions -- REFERENCES.