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...

In accounting for the rather gloomy trend of the aid effectiveness literature over the last few years, one explanatory strand has been fiscal, suggesting in particular that aid flows in weak states have tended to erode the taxbase and the structure of institutions. We pursue this idea, tracing...

The so called resource curse, the fact that countries rich in natural resources often show lower rates of economic growth compared to resource-poor countries, is commonly attributed to the low quality of governance in resource-rich countries. The Extractive Industries Transparency Initiative...

We study the effect of inflowing remittances - a major source of capital for many countries - on tax-revenues and tax-policy. Instrumenting remittances with changes in the oil-price interacted with a country's distance to oil-producing countries, we find that remittances have a large positive...

The present paper explores the extent to which new joint General Budget Support (GBS) systems have been able to overcome the problems of aid dependency and negative fiscal incentives that can potentially result from high levels of on-budget aid. As approximately 90 percent of new joint GBS goes...

The objective of this paper is to examine the nature and magnitude of the effects of infrastructure provision on regional economic performance. The empirical evidence of our analysis is based on difference-in-difference estimation linking the changes in the growth rate of regional-level economic...

Analytical and numerical results show how the presence of a subsidy on household and firm purchases of oil products distorts long-run macroeconomic aggregates in an oil-importing developing country. Beyond leading to over-consumption of oil products these subsidies also lead to increased labor...

Financial crises in developing and transition countries have often proven disruptive to policies and programs due to procyclical trends government spending growth. Given the importance and significant component of public budgets devoted to education and health cuts in government expenditures...

Revenue and Gross State Domestic Product data for 1993-94 to 2008-09 are used to study the revenue performance of the state Value-Added Tax (VAT) in India's 29 states. Both the direct revenue impact and the indirect impact through the VAT base were assessed. No indirect impact of the VAT on its...

Issues of taxation and development, which have long been a central concern of the IMF, have attracted wider and renewed interest in the last few years. This paper reflects on three broad lessons of experience: that developing countries differ vastly in tax matters, and in ways that are less than...