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A Timeseries Analysis of the Impact of Foreign Aid on Central Government's Fiscal Budget in Uganda

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  • Thomas Bwire
  • Oliver Morrissey
  • Tim Lloyd

Abstract

A dynamic relationship between foreign aid and domestic fiscal variables in Uganda is analysed using a cointegrated vector autoregressive model over the period 1972-2008. Results show that aid is a significant element of long-run fiscal equilibrium, is associated with increased tax effort and public spending, and reduced domestic borrowing. Shocks to tax revenue are the pulling forces, while those to domestic borrowing, government spending and aid are the pushing forces of the system.

Suggested Citation

  • Thomas Bwire & Oliver Morrissey & Tim Lloyd, 2013. "A Timeseries Analysis of the Impact of Foreign Aid on Central Government's Fiscal Budget in Uganda," WIDER Working Paper Series wp-2013-101, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2013-101
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    File URL: https://www.wider.unu.edu/sites/default/files/WP2013-101.pdf
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    References listed on IDEAS

    as
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