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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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    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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    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X1300185X
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    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
    DOI: 10.1016/j.worlddev.2013.08.003
    Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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