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Donor Preferences and Recipient Fiscal Behavior: A Simultaneous Analysis of Foreign Aid

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  • Cashel-Cordo, Peter
  • Craig, Steven G

Abstract

The authors theoretically develop and empirically estimate a preference model determining foreign aid donor behavior. Aid access and levels are separately determined by endogenous budgetary allocations, the international economic environment, the distribution of income between countries, basic human needs, the small country effect, and regional bias. The authors find fungibility of aid in recipient budgets is due to donor and recipient preferences. Despite the importance of other economic influences, they find a significant pro-poor country bias in aid allocations, although little aggregate influence of basic human needs or regional bias. The small country effect is significant for two (of six) donors. Copyright 1997 by Oxford University Press.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 35 (1997)
Issue (Month): 3 (July)
Pages: 653-71

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Handle: RePEc:oup:ecinqu:v:35:y:1997:i:3:p:653-71

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Cited by:
  1. Kitaura, Koji, 2009. "Child labor, education aid, and economic growth," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 614-620, December.
  2. Ira N. Gang & Haider Ali Khan, 1998. "Foreign Aid and Fiscal Behavior in a Bounded Rathionality Model: Different Policy Regimes," Departmental Working Papers 199812, Rutgers University, Department of Economics.
  3. Calmette, Marie-Francoise & Kilkenny, Maureen, 2001. "International charity under asymmetric information," Economics Letters, Elsevier, vol. 74(1), pages 107-111, December.
  4. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.
  5. Raschky, Paul A. & Schwindt, Manijeh, 2012. "On the channel and type of aid: The case of international disaster assistance," European Journal of Political Economy, Elsevier, vol. 28(1), pages 119-131.
  6. Abdiweli Ali & Hodan Isse, 2006. "An Empirical Analysis of the Determinants of Foreign Aid: A Panel Approach," International Advances in Economic Research, Springer, vol. 12(2), pages 241-250, May.
  7. Hagen, Rune Jansen, 2006. "Samaritan agents? On the strategic delegation of aid policy," Journal of Development Economics, Elsevier, vol. 79(1), pages 249-263, February.

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