Aid and Government Fiscal Behaviour: What Does the Evidence Say?

No wp-2012-001, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Donors are concerned about how their aid is used, especially how it affects fiscal behaviour by recipient governments. This study reviews the recent evidence on the effects of aid on government spending and tax effort in recipient countries, concluding with a discussion of when (general) budget support is a fiscally efficient aid modality. Severe data limitations restrict inferences on the relationship between aid and spending, especially as the government is not aware of all the aid available to finance the provision of public goods.

Keywords: Economic assistance and foreign aid; Fiscal policy; Government spending policy; Taxation (search for similar items in EconPapers)
Date: 2012
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