the short-run generosity α of the donor, such that the overall post-conflict aid A is : Economic impacts According to neo-classical growth models, high growth rates are expected to take place in post-conflict societies until the steady state capital stock is reached. Following the Collier-Dollar model explaining the impact of post-conflict aid on growth, we find that aid is generally subject to diminishing marginal returns and that the impact of post-conflict aid on growth highly depends on the policy environment, meaning that in a better policy environment aid is more effective in boosting growth, resulting in the following equation:whereby X stands for any exogenous factors, P measures the quality of policy and A gives the amount of aid received by the conflict-torn country. In order to know the marginal impact of aid on growth, we derivate the above equation with respect to A:Hence, aid reaches its saturation point at: Aid given to states that are currently in a post-conflict phase has also a signaling effect on foreign investors that would otherwise not be able to assess properly the situation on the ground due to the lack of information about credibility and economic potential. Aid reflects the support and trust that an economy enjoys. One should assume a rapid acceleration in economic growth after a short post-conflict period since the prevalent uncertainty, which is typical under war conditions is resolved once the reconstruction of political institutions has started. Thus, investment and (technical) innovation is more likely to take place. In addition to that, the labor productivity might increase due to a more peaceful environment and the gradual recovery of human capital thanks to health care, growing opportunities of education and research and better nutrition. If peace can be maintained, it is to be assumed that a phase of catch-up will take place which will coast out after a given time and then the economy will fall back to its long-term growth rate. Effectiveness Addressing the question of the effectiveness and sustainability of post-conflict aid, evaluations have shown that it differs between sectors. All in all, post-conflict aid is effective in improving social infrastructure, like education, health, water, sanitation, and governance, but ineffective in rebuilding economic infrastructure, like transportation, communication, energy, and finance. Studies from villages in northern Liberia could demonstrate that post-conflict reconstruction programs, as part of post-conflict aid can have a measurable impact on social cohesion in this villages with