Foreign aid and fiscal behavior in a bounded rationality model: Different policy regimes

Ira Gang and Haider Khan ()

Empirical Economics, 1999, vol. 24, issue 1, 134 pages

Abstract: We examine how the source of foreign aid affects the composition of the recipient government's spending. Does the source of aid - bilateral or multilateral - influence recipient policy-makers' choice between development and nondevelopment expenditure? We depart from previous literature by introducing strong asymmetries in policy-makers' preferences. With the financial constraints set by foreign aid and domestic revenues, this formalization allows us to model and estimate the fiscal behavior of government policy-makers in the presence of foreign aid.

Keywords: Foreign; aid; ·; India (search for similar items in EconPapers)
JEL-codes: F35 H2 O1 (search for similar items in EconPapers)
Date: 1999-02-11
Note: received: September 1996 / final version received: April 1998
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Citations: View citations in EconPapers (17)

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Working Paper: Foreign Aid and Fiscal Behavior in a Bounded Rathionality Model: Different Policy Regimes (1998)
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