Recent developments in fiscal response with an application to Costa Rica
✍ Scribed by Susana Franco-Rodriguez
- Publisher
- John Wiley and Sons
- Year
- 2000
- Tongue
- English
- Weight
- 123 KB
- Volume
- 12
- Category
- Article
- ISSN
- 0954-1748
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✦ Synopsis
This paper uses the framework of Fiscal Response Models to analyse the impact of foreign assistance on recipient government's behaviour. Such models provide a means of examining the impact of aid on taxation and expenditure decisions. In the theoretical model presented here foreign aid has been endogenized to account for the fact that governments have some in¯uence over the amount of aid committed to the country, and considerable in¯uence over disbursements. Thus, ®scal planning will be based on targets for expenditures and revenues, the latter including aid. This permits a more complete examination of the eects of aid on government ®scal behaviour than do standard fungibility models. The model is illustrated in an application to Costa Rica, where the eect of aid on government allocation of resources appears to have been negligible.