A Timeseries Analysis of the Impact of Foreign Aid on Central Government's Fiscal Budget in Uganda

Thomas Bwire, Oliver Morrissey and Tim Lloyd

No wp-2013-101, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: A dynamic relationship between foreign aid and domestic fiscal variables in Uganda is analysed using a cointegrated vector autoregressive model over the period 1972-2008. Results show that aid is a significant element of long-run fiscal equilibrium, is associated with increased tax effort and public spending, and reduced domestic borrowing. Shocks to tax revenue are the pulling forces, while those to domestic borrowing, government spending and aid are the pushing forces of the system.

Keywords: Economic assistance and foreign aid; Econometric models (Economic development); Public expenditures; Fiscal policy; Taxation (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:wp-2013-101

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