EconPapers    
Economics at your fingertips  
 

The fiscal management of permanent and temporary foreign aid: Evidence from sub‐Saharan Africa

Loujaina Abdelwahed ()

Journal of International Development, 2021, vol. 33, issue 4, 685-716

Abstract: 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.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1002/jid.3542

Related works:
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:wly:jintdv:v:33:y:2021:i:4:p:685-716

Access Statistics for this article

Journal of International Development is currently edited by Paul Mosley and Hazel Johnson

More articles in Journal of International Development from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2023-10-04
Handle: RePEc:wly:jintdv:v:33:y:2021:i:4:p:685-716