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Aid and public sector behavior in developing countries

journal contribution
posted on 2000-06-01, 00:00 authored by Mark McGillivray
This paper analyzes developing-country public-sector fiscal behavior. It is concerned specifically with how aid inflows affect various categories of revenue and expenditure. An economic model is developed, which differs from those used in previous studies by allowing domestic borrowing to finance both capital and recurrent expenditure. Structural and reduced-form equations are derived and estimated using 1956-95 time-series data for Pakistan. Results indicate that aid is allocated mainly to investment, is positively associated with both investment and consumption expenditure, and has no final impact on taxation.

History

Journal

Review of Development Economics

Volume

4

Issue

2

Pagination

156 - 163

Publisher

Wiley-Blackwell Publishing

Location

Chichester, Eng.

ISSN

1363-6669

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2000, Blackwell Publishers

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