In previous papers we have argued that aid is likely to mitigate the negative effects of external shocks on economic growth (i.e., aid is more effective in countries that are more vulnerable to external shocks). Recently an important debate has emerged about the possible negative effects of aid...

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...

During recent years, new doubts about the effectiveness of international aid have emerged. One of the arguments employed to justify this sceptical view is that aid can hinder tax effort in developing countries. Nevertheless, empirical research on the aid-tax nexus is inconclusive and it shows...

The link between foreign aid and economic growth remains a controversial issue in the literature, and a large share of the disagreement could be explained by differences in the data employed. Using GDP data from three different versions of the Penn World Table and the World Development...

This paper is a contribution to the literature on aid and growth. Despite an extensive existing empirical literature in this area, studies have not paid much attention to the importance of transmission mechanisms in determining the influence of aid inflows on growth rates. In other words,...