frequently face borrowing constraints and tax revenue mobilization problems. This paper develops a dynamic stochastic small open …

concessional financing does not cover the full cost of the investment program. Covering the resulting gap with tax increases or … benefits of public investment. Covering the gap with domestic borrowing market is not helpful either: higher domestic rates … constraints on increases in tax rates. But the strategy may be also risky. With poor execution, sluggish fiscal policy reactions …