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THE IMPACT OF AID ON THE FISCAL BEHAVIOUR OF GOVERNMENTS IN TRANSITION ECONOMIES

100%
Erden L., Güven A.
Ekonomický časopis (Journal of Economics)
|
2009
|
vol. 57
|
issue 5
445-457
EN
AThis 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.
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