The Impact of Aid on the Fiscal Behaviour of Governments in Transition Economies

Erden L., Guven A.

EKONOMICKY CASOPIS, cilt.57, sa.5, ss.445-457, 2009 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 57 Sayı: 5
  • Basım Tarihi: 2009
  • Dergi Adı: EKONOMICKY CASOPIS
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.445-457
  • Anahtar Kelimeler: foreign aid, fiscal response, transition economies, dynamic panel, FOREIGN-AID, PANEL-DATA, DEVELOPING-COUNTRIES, INVESTMENT
  • Hacettepe Üniversitesi Adresli: Evet

Özet

This study contributes to the aid-effectiveness literature by applying a fiscal response model to a panel of 24 transition nations over the periods 1990 - 2005. The study employs various dynamic panel estimation methods in an effort to analyze the impact of foreign aid on governments' fiscal behaviour; that is, government investment, government consumption, public revenue creation and borrowing activities. The findings shed some light on the aid-growth nexus, indicating that aid promotes government investment while does not influence government consumption behaviour. Further, there appears to be a positive association between aid and public borrowing, which can be detrimental to the growth process in transition economies.