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The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries

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  • Sena Kimm GNANGNON

Abstract

We use panel data on seventy-four developing countries for the period 1980–2007 to examine the effects of aid unpredictability and migrants’ remittances on fiscal consolidation in these countries. Two definitions of fiscal adjustment are considered and a conditional logit model is used to perform the analysis. Evidence is shown that except for the case of low-income countries, remittances increase the likelihood of fiscal consolidation, be the latter gradual or rapid. Surprisingly, we observe that aid unpredictability, except in SSA countries where the effect is strongly positive and significant, does not affect the adoption of fiscal consolidation measures in all the groups considered.

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  • Sena Kimm GNANGNON, 2012. "The Effect of Development Aid Unpredictability and Migrants’ Remittances on Fiscal Consolidation in Developing Countries," Working Papers 201210, CERDI.
  • Handle: RePEc:cdi:wpaper:1333
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    Cited by:

    1. Blanca Moreno-Dodson & Sanket Mohapatra & Dilip Ratha, 2012. "Migration, Taxation, and Inequality," World Bank Publications - Reports 10038, The World Bank Group.

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    More about this item

    Keywords

    Remittances; Aid Unpredictability; Fiscal consolidation;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • F35 - International Economics - - International Finance - - - Foreign Aid

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