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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.

Suggested Citation

  • Cashel-Cordo, Peter & Craig, Steven G, 1997. "Donor Preferences and Recipient Fiscal Behavior: A Simultaneous Analysis of Foreign Aid," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 653-671, July.
  • Handle: RePEc:oup:ecinqu:v:35:y:1997:i:3:p:653-71
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    Cited by:

    1. 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.
    2. Richard C. Lin, 2001. "Complementary Measures To Foreign Aid: Taiwan And The Prc Under Diplomatic Rivalry," Contemporary Economic Policy, Western Economic Association International, vol. 19(3), pages 360-368, July.
    3. repec:kap:iaecre:v:12:y:2006:i:2:p:241-250 is not listed on IDEAS
    4. Kitaura, Koji, 2009. "Child labor, education aid, and economic growth," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 614-620, December.
    5. Ira N. Gang & Haider Ali Khan, 1999. "Foreign aid and fiscal behavior in a bounded rationality model: Different policy regimes," Empirical Economics, Springer, pages 121-134.
    6. Calmette, Marie-Francoise & Kilkenny, Maureen, 2001. "International charity under asymmetric information," Economics Letters, Elsevier, vol. 74(1), pages 107-111, December.
    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.
    8. Dollar, David & Levin, Victoria, 2006. "The Increasing Selectivity of Foreign Aid, 1984-2003," World Development, Elsevier, vol. 34(12), pages 2034-2046, December.

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