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The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries

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  • Gnangnon, Sèna Kimm
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    Abstract

    We use panel data on 74 developing countries for the period 1980–2007 to examine the effects of aid unpredictability and migrants’ remittances on fiscal consolidation in these countries. Using two definitions of fiscal adjustment and a conditional logit model to perform our analysis, evidence is shown that except for the case of low-income countries (especially gradual fiscal retrenchment), remittances increase the likelihood of fiscal consolidation, be the latter gradual or rapid. Surprisingly, we observe that aid unpredictability does not affect the adoption of fiscal consolidation measures in all the groups considered.

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    Bibliographic Info

    Article provided by Elsevier in its journal World Development.

    Volume (Year): 54 (2014)
    Issue (Month): C ()
    Pages: 168-190

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    Handle: RePEc:eee:wdevel:v:54:y:2014:i:c:p:168-190

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    Web page: http://www.elsevier.com/locate/worlddev

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    Keywords: remittances; aid unpredictability; fiscal consolidation;

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    Cited by:
    1. Mthuli Ncube & Zuzana Brixiova, 2013. "Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa," Working Paper Series 996, African Development Bank.

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