Volatility of Development Aid: From the Frying Pan into the Fire?

A. Javier Hamann () and Ales Bulir

No 2006/065, IMF Working Papers from International Monetary Fund

Abstract: The positive impact of foreign aid is limited by the erratic behavior of aid flows. The introduction in 1999 of various initiatives anchored in Poverty Reduction Strategy Papers (PRSPs) which were aimed at strengthening coordination among donors, improving the design of financial support programs, and improving domestic records of policy implementation should have led to an improvement in the time series properties of aid flows. We find no evidence of any fundamental changes in the way aid has been delivered in the past five years. If anything, aid volatility has worsened somewhat and the information value of long-term lending commitments has declined. We take these results to mean that the main causes of the volatility and unpredictability of aid, and the broader issue of macroeconomic instability in low-income countries, have not been addressed in a systematic manner by the donor community.

Keywords: WP; aid volatility; revenue series; GDP shock; aid disbursement; C-to-D ratio; shocks equivalent (search for similar items in EconPapers)
Pages: 32
Date: 2006-03-01
References: Add references at CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=18806 (application/pdf)

Related works:
Journal Article: Volatility of Development Aid: From the Frying Pan into the Fire? (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2006/065

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().