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Aid and public sector borrowing in developing countries

โœ Scribed by Simon Feeny; Mark McGillivray

Publisher
John Wiley and Sons
Year
2003
Tongue
English
Weight
93 KB
Volume
15
Category
Article
ISSN
0954-1748

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โœฆ Synopsis

Abstract

This paper analyses the relationship between public sector borrowing and foreign development aid. It is concerned specifically with the public sector borrowing requirement net of aid, questioning the assumption that aid and this type of borrowing are substitutes for one another. After looking at the public sector budget constraint and various conditions under which aid might lead to an increase in this borrowing, the paper surveys the empirical results of literature on aid and public sector fiscal behaviour. It finds that the results of a number of studies are consistent with aid leading to increases in this borrowing. Further investigation, in the form of econometric analysis of panel data, also points to this outcome. Copyright ยฉ 2003 John Wiley & Sons, Ltd.

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