Fiscal Effects of Aid
Author: Mark McGillivray
Publisher:
Published: 2001
Total Pages: 38
ISBN-13:
DOWNLOAD EBOOKRead and Download eBook Full
Author: Mark McGillivray
Publisher:
Published: 2001
Total Pages: 38
ISBN-13:
DOWNLOAD EBOOKAuthor: Jean-Louis Combes
Publisher: International Monetary Fund
Published: 2016-06-09
Total Pages: 32
ISBN-13: 1484382692
DOWNLOAD EBOOKForeign aid is a sizable source of government financing for several developing countries and its allocation matters for the conduct of fiscal policy. This paper revisits fiscal effects of shifts in aid dependency in 59 developing countries from 1960 to 2010. It identifies structural shifts in aid dependency: upward shifts (structural increases in aid inflows) and downward shifts (structural decreases in aid inflows). These shifts are treated as shocks in aid dependency and treatment effect methods are used to assess the fiscal effects of aid. It finds that shifts in aid dependency are frequent and have significant fiscal effects. In addition to traditional evidence of tax displacement and “aid illusion,” we show that upward shifts and downward shifts in aid dependency have asymmetric effects on the fiscal accounts. Large aid inflows undermine tax capacity and public investment while large reductions in aid inflows tend to keep recipients’ tax and expenditure ratios unchanged. Moreover, the tax displacement effects tend to be temporary while the impact on expenditure items are persistent. Finally, we find that the undesirable fiscal effects of aid are more pronounced in countries with low governance scores and low absorptive capacity, as well as those with IMF-supported programs.
Author: Emilija Timmis
Publisher:
Published: 2015
Total Pages:
ISBN-13:
DOWNLOAD EBOOKAuthor: Nabamita Dutta
Publisher: Springer Nature
Published: 2019-09-06
Total Pages: 302
ISBN-13: 3030221210
DOWNLOAD EBOOKA response to the pressing need to address and clarify the substantial ambiguity within current literature, this edited volume aims to deepen readers’ understanding of the impact of foreign aid on development outcomes based on the latest findings in research over the past decade. Foreign aid has long been seen as one of two extremes: either beneficial or damaging, a blessing or a curse. Consequently, many readers perceive aid’s effectiveness based on the work of scholars who are assessing the impact of aid from one of two antithetical perspectives. This book takes a different approach, shedding light on recent research that can deepen our understanding of the complex relationship between aid and its aftereffects. Drawing from an extensive set of studies that have explored micro and macro impacts of foreign aid for recipient nations, chapter authors highlight more layered and nuanced findings, with a focus on donor characteristics, political motives, and an evaluation of aid projects and their effectiveness, including the differential impact based on type of aid. This volume is the first of its kind to unpack aid as a complex rather than a unitary concept and explore the wide areas of grey that have long enshrouded foreign aid.
Author: Mark McGillivray
Publisher:
Published: 2001
Total Pages: 38
ISBN-13:
DOWNLOAD EBOOKAuthor: Ales Bulir
Publisher: International Monetary Fund
Published: 2002-06
Total Pages: 40
ISBN-13:
DOWNLOAD EBOOKThis paper focuses on the macroeconomic aspects of fiscal management in aid-receiving countries. Despite the declining share of aid in budgets of donor countries, aid continues to play an important role in many developing countries. The paper first discusses the implications of aid in the economy as a whole and highlights the possibility of Dutch-disease effects of aid. Second, it discusses the implications of aid for short-term fiscal policy management?in particular, how actual or anticipated changes in aid receipts should be reflected in government spending.
Author: Kene Ezemenari Ephraim Kebede and Sajal Lahiri
Publisher: World Bank Publications
Published: 2008
Total Pages: 35
ISBN-13:
DOWNLOAD EBOOKAbstract: The inflow of large quantities of foreign aid into Rwanda since 1994 can have potential adverse effects such as aid dependency via a significant negative effect on tax efforts and on public investments. This paper carries out a theoretical and empirical study to examine these issues. The theoretical part develops a model in which the recipient government decides on the optimal level of tax and optimally allocates total government revenue between current expenditure and public investment. The theoretical model makes it possible to empirically test whether an increase in aid is likely to reduce the optimal tax rate and the proportion of public expenditure allocated to public investment. The econometric analysis uses time series data on Rwanda to show, in line with other studies in the literature, a negative relationship between increased aid and the tax rate; but the magnitude of the effects are extremely small. In the case of Rwanda, reforms to the tax administration and expansion of the tax base have had mitigating effects. As far as the effect on public investment, the overall effect was negative in the past; however, since 1995 the direction of this effect has changed.
Author:
Publisher: World Bank Publications
Published: 1998
Total Pages: 164
ISBN-13: 9780195211238
DOWNLOAD EBOOKAssessing Aid determines that the effectiveness of aid is not decided by the amount received but rather the institutional and policy environment into which it is accepted. It examines how development assistance can be more effective at reducing global poverty and gives five mainrecommendations for making aid more effective: targeting financial aid to poor countries with good policies and strong economic management; providing policy-based aid to demonstrated reformers; using simpler instruments to transfer resources to countries with sound management; focusing projects oncreating and transmitting knowledge and capacity; and rethinking the internal incentives of aid agencies.
Author: Robert Osei
Publisher:
Published: 2005
Total Pages:
ISBN-13: 9789291907441
DOWNLOAD EBOOKAuthor: Vinaya Swaroop
Publisher:
Published: 2001
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKThis paper models fiscal effects of foreign aid in a federal system of governance. Our main innovation is to incorporate the inter-governmental fiscal link in examining economic fungibility of foreign aid. The model is applied to the expenditure decisions of the central government of India. The two main findings are: (i) Foreign aid merely substitutes for spending that the government would have undertaken anyway; funds freed by aid are spent on non-development activities, and (ii) In passing earmarked external assistance to states, the central government makes a reduction in its transfers to states. These findings indicate that the central government's expenditure choices are unaffected by external assistance. The implication for donors is that even though their development projects may be associated with very high rates of economic return, they could be assisting the central government in financing something very different at the margin. For the state governments, the finding indicates that they may not be reaping the full benefits of externally procured assistance.