The fiscal management of permanent and temporary foreign aid
Evidence from sub‐Saharan Africa
Bibliographic Data
| ID | 21594403 |
|---|---|
| Authors | Loujaina Abdelwahed (0000-0003-0419-1310, Faculty of Humanities and Social Sciences The Cooper Union for the Advancement of Science and Art New York New York USA, corresponding author) |
| Year | 2021 |
| Volume | 33 |
| Issue | 4 |
| Pages | 685-716 |
| Publication date | 2021-05-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of International Development (JOURNAL) |
| Journal identifiers | ISSN: 0954-1748 • E-ISSN: 1099-1328 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/jid.3542 |
| OpenAlex | W3153488246 |
| Language | EN |
| References cited | 37 |
This paper argues that whether aid receipts are permanent or temporary is an important yet overlooked determinant of the fiscal management of foreign aid. I present a theoretical framework that shows that permanent aid and temporary aid differently affect the recipient governments' choice between taxes and debt issuance. Empirically, I assess how the fiscal deficit responds to permanent aid and temporary aid in a panel of sub‐Saharan African aid‐recipient countries. Results show that while permanent aid leads to higher deficit, temporary aid reduces the deficit. The different responses of government spending to permanent aid and temporary aid help explain this pattern. Results provide important policy implications for the design of foreign aid programmes to developing countries
Aid effectiveness · Business · Debt · Developing country · Development aid · Development economics · Economic growth · Economic policy · Economics · External debt · Fiscal deficit · Fiscal policy · International economics · Macroeconomics · Monetary economics · Panel data · Economic Growth and Development · Fiscal Policy and Economic Growth · International Development and Aid
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The Fiscal Effects of Aid in Ethiopia
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On the Determination of the Public Debt
| Citation velocity | historical |
|---|---|
| Highly cited | No |