This paper focuses on the macroeconomic management of large inflows of foreign aid. It investigates the extent to which African countries have coordinated fiscal and macroeconomic responses to aid surges. In practice, we construct a panel dataset to investigate the level of aid 'absorption' and...

This paper uses the cointegrated vector autoregressive (CVAR) model to assess the dynamic relationship between foreign aid inflows, public expenditure, revenue and domestic borrowing in Ethiopia. It departs from the existing literature by using a unique quarterly fiscal dataset (1993-2008) and...

Two findings have been common in the literature on the impact of foreign aid on public sector fiscal behaviour in developing countries. The first is that aid "sticks" to higher levels of recipient government expenditure, with aggregate expenditure often rising by more than the value of the aid...

It is clear from the implications of growth theory that the impact of aid depends on how it affects savings, investment and government behaviour. In respect of low-income countries, which are the principal aid recipients and the economies for which the issue of the impact of aid on growth is...

This paper presents an empirical analysis of the relationship between foreign aid inflows and the real exchange rate in 12 countries of the CFA Franc zone. Using dynamic panel analysis we find that foreign aid inflows do not generate Dutch disease effects in these countries. In terms of policy...