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000026226 037__ $$a879-2016-64240
000026226 041__ $$aen
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000026226 084__ $$aO23
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000026226 245__ $$aModelling the Fiscal Effects of Aid: An Impulse Response Approach for Ghana
000026226 260__ $$c2002
000026226 269__ $$a2002
000026226 270__ $$moliver.morrissey@nottingham.ac.uk$$pMorrissey,   Oliver
000026226 300__ $$a32
000026226 336__ $$aWorking or Discussion Paper
000026226 446__ $$aEnglish
000026226 490__ $$aHWWA Discussion Paper 170
000026226 520__ $$aAn important feature of aid to developing countries is that it is given to the government. As a result aid has the potential to affect budgetary behaviour. Although the (albeit limited) aid-growth literature has addressed the effect of aid on policy, it has tended to neglect the effect of aid on the fiscal behaviour of governments. While fiscal response models have been developed to examine the effects of aid on fiscal aggregates - taxation, expenditure and borrowing - the underlying theory is ad hoc and empirical methods used are subject to severe limitations. This paper applies techniques developed in the "macroeconometrics" literature to estimate the dynamic structural relationship between aid and fiscal aggregates. Using vector autoregressive methods, an impulse response function is estimated to model the effect of aid on fiscal behaviour in Ghana. Results suggest that aid does not have a direct effect on the volume of government spending in Ghana but is treated as a substitute for domestic borrowing. Government spending does rise significantly following aid but this is principally due to an indirect effect arising from higher tax revenue associated with aid inflows. This, aid to Ghana has tended to be associated with reduced domestic borrowing and increased tax effort, combining to increase public spending.
000026226 650__ $$aInternational Development
000026226 650__ $$aInternational Relations/Trade
000026226 6531_ $$aAid
000026226 6531_ $$aFiscal Response
000026226 6531_ $$aGhana
000026226 700__ $$aMorrissey, Oliver
000026226 700__ $$aOsei, Robert
000026226 700__ $$aLloyd, Tim A.
000026226 8564_ $$s250865$$uhttp://ageconsearch.umn.edu/record/26226/files/dp020170.pdf
000026226 887__ $$ahttp://purl.umn.edu/26226
000026226 909CO $$ooai:ageconsearch.umn.edu:26226$$qGLOBAL_SET
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  Previous issue date: 2002
000026226 982__ $$gHamburg Institute of International Economics>Discussion Paper Series
000026226 980__ $$a879