This article draws further attention to the importance of taking into account off-budget aid when estimating the degree of foreign aid fungibility. It does so by re-evaluating the results of a recent, influential paper which concluded that health aid is fully fungible in the long run. Allowing...

Governments in developing countries play an important role in the growth process, most notably through their budgetary policies. This potentially beneficial role is, however, hindered by government expenditure inefficiency. This is illustrated in a basic model of public spending and economic...