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Aid, Political Business Cycles and Growth in Africa

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  • Blessing Chiripanhura
  • Miguel Niño‐Zarazúa

Abstract

This study develops a model of opportunistic behaviour in which an incumbent government resorts to expansionary fiscal and/or monetary stimuli to foster economic growth and thus, maximize the probability of re‐election. Using a panel dataset of 31 African countries covering the period 1980 to 2009, we test whether donor aid facilitates such political business cycles and investigate their effect on growth. We find evidence that donors, through guaranteeing support to incumbent governments, may unwittingly instigate political business cycles. With forbearance, and sometimes complicity by donors, aid seems to allow incumbent governments to instigate macroeconomic stimuli that ensure electoral victory with no fear of losing aid support. © 2015 UNU‐WIDER. Journal of International Development published by John Wiley & Sons, Ltd.

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  • Blessing Chiripanhura & Miguel Niño‐Zarazúa, 2015. "Aid, Political Business Cycles and Growth in Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(8), pages 1387-1421, November.
  • Handle: RePEc:wly:jintdv:v:27:y:2015:i:8:p:1387-1421
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    File URL: http://hdl.handle.net/10.1002/jid.3188
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    Cited by:

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    3. Syed Mansoob Murshed & Muhammad Badiuzzaman & Mohammad Habibullah Pulok, 2017. "Fiscal capacity and social protection expenditure in developing nations," WIDER Working Paper Series wp-2017-60, World Institute for Development Economic Research (UNU-WIDER).
    4. Dragan Filipovich & Miguel Niño-Zarazúa & Alma Santillán Hernández, 2018. "Campaign externalities, programmatic spending, and voting preferences in rural Mexico: The case of Progresa-Oportunidades-Prospera programme," WIDER Working Paper Series wp-2018-27, World Institute for Development Economic Research (UNU-WIDER).
    5. Dragan Filipovich & Miguel Niño-Zarazúa & Alma Santillán Hernández, 2018. "Campaign externalities, programmatic spending, and voting preferences in rural Mexico: The case of Progresa-Oportunidades-Prospera programme," WIDER Working Paper Series 027, World Institute for Development Economic Research (UNU-WIDER).
    6. Miguel Niño-Zarazúa, 2015. "Aid, education policy, and development," WIDER Working Paper Series wp-2015-135, World Institute for Development Economic Research (UNU-WIDER).
    7. Syed Mansoob Murshed & Muhammad Badiuzzaman & Mohammad Habibullah Pulok, 2017. "Fiscal capacity and social protection expenditure in developing nations," WIDER Working Paper Series 060, World Institute for Development Economic Research (UNU-WIDER).

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