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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

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    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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    File URL: http://publi.cerdi.org/ed/2012/2012.10.pdf
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    Paper provided by CERDI in its series Working Papers with number 201210.

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    Length: 39
    Date of creation: 2012
    Handle: RePEc:cdi:wpaper:1333
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