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Foreign aid and fiscal behavior in a bounded rationality model: Different policy regimes (1999)

Gang, Ira N. ; Khan, Haider Ali

Springer

Empirical economics 24 (1999), S. 121-134

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ISSN: 1435-8921

Keywords: Key words: Foreign aid ; India ; JEL classifications: H2 ; O1 ; F35

Source: Springer Online Journal Archives 1860-2000

Topics: Economics

Notes: Abstract. We examine how the source of foreign aid affects the composition of the recipient government's spending. Does the source of aid – bilateral or multilateral – influence recipient policy-makers' choice between development and nondevelopment expenditure? We depart from previous literature by introducing strong asymmetries in policy-makers' preferences. With the financial constraints set by foreign aid and domestic revenues, this formalization allows us to model and estimate the fiscal behavior of government policy-makers in the presence of foreign aid.

Type of Medium: Electronic Resource

URL: http://dx.doi.org/10.1007/s001810050047

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