The main thrust of this study has been to provide empirical illuminations to the debate on the effectiveness of foreign aid in driving sustainable growth and development. Using an extended Barro style model of aid-augmented government expenditure and economic growth, an analytical model is...

We examine the properties of alternative monetary policy rules in response to large aid surges in low-income countries characterized by incomplete capital market integration and currency substitution. Using a dynamic stochastic general equilibrium model, we show that simple monetary rules that...

This paper investigates the macroeconomic challenges created by a surge in aid inflows. It develops an analytical framework for examining possible policy responses to increased aid, in terms of absorption and spending of aid - where the central bank controls absorption through monetary policy...

The external financing of fiscal deficit is key to bridging public revenue shortfalls within developing economies. However, the public expenditure responses to the incoming foreign financial assistances, as documented in the existing literature, depict ambiguity with respect to the nature of the...

The most recent literature on aid effectiveness finds a positive effect of aid on growth. To the extent that aid goes through the budget, this either reflects an aid-financed increase in government expenditures (quantity effect) or an improvement in the use of government resources as a result of...

There is some debate regarding whether aid to poor recipients should be given in the form of loans or grants. This paper concentrates on whether the form of aid influences the effects on recipient fiscal behaviour. The main part of this paper investigates the recipient tax revenue response to...

Recent years have seen a growing interest among donors on taxation in developing countries. This reflects a concern for domestic revenue mobilization to finance public goods and services, as well as recognition of the centrality of taxation for growth and redistribution. The global financial...

This study assesses the fiscal and monetary management challenges that can be associated with large inflows of foreign aid. It provides a brief overview of the literature on Dutch Disease (DD) as applied to mineral wealth and then assesses the conventional policy responses that are available to...

The 'right' choice of instruments and modalities to provide aid to developing countries in support of poverty reduction and economic development is arguably the most contested issue in the current international debate on aid effectiveness. A particular controversy exists around the provision of...