The paper presents a theoretical and empirical analysis of a donor's choice of the composition of unrestricted and in-kind/restricted transfers to a recipient and how this composition is adjusted in response to changes in the moral hazard behavior of the recipient. In-kind or restricted...

The most recent literature on aid effectiveness finds a positive effect of aid on growth. To the extent that aid goes through the budget, this either reflects an aid-financed increase in government expenditures (quantity effect) or an improvement in the use of government resources as a result of...

Aid is said to be fungible at the aggregate level if it raises government expenditures by less than the total amount. This happens when the recipient government decreases domestic revenue, decreases net borrowing, or when aid bypasses the budget. This study makes three contributions to both...

The ‘right' choice of instruments and modalities to provide aid to developing countries in support of poverty reduction and economic development is arguably the most contested issue in the current international debate on aid effectiveness. A particular controversy exists around the provision...

This paper studies how macroeconomic policies can help offset two unintended and undesirable features of foreign aid: its volatility and Dutch disease. We present evidence that aid volatility augments trade balance volatility and that foreign aid, with the important exception of years of adverse...

Burnside and Dollar (2000) conclude aid promotes growth in the presence of sound policies. Easterly et al. (2004) overturn this result. We revisit this highly debated topic with updated data. Our results overturn Burnside and Dollar's original findings by simply using new data over the same...

The most recent literature on aid effectiveness finds a positive effect of aid on growth. To the extent that aid goes through the budget, this either reflects an aid-financed increase in government expenditures (quantity effect) or an improvement in the use of government resources as a result of...

In a corrupt tax administration a rise in tax rate sets about complicated strategic moves by both taxpayers and administrators. It is shown that in some circumstances, this may bring about a Laffer like behavior of overall tax revenue, i.e. a higher tax rate results in smaller net revenue for...