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The fungibility of health aid reconsidered

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  • Nicolas Van de Sijpe

Abstract

This paper draws further attention to the importance of taking into account off-budget aid when estimating the degree of foreign aid fungibility. It does so by re-evaluating the results of a recent, influential paper which concluded that health aid is fully fungible in the long run. Allowing for the presence of off-budget aid indicates that the degree of fungibility of health aid is much more uncertain than at first blush appears. Under plausible assumptions about the role of off-budget aid, the conclusion of full fungibility is overturned and at most only a limited degree of fungibility is found.

Suggested Citation

  • Nicolas Van de Sijpe, 2013. "The fungibility of health aid reconsidered," CSAE Working Paper Series 2013-10, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2013-10
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    References listed on IDEAS

    as
    1. Nicolas Van de Sijpe, 2013. "Is Foreign Aid Fungible? Evidence from the Education and Health Sectors," The World Bank Economic Review, World Bank, vol. 27(2), pages 320-356.
    2. Feeny, Simon, 2007. "Foreign Aid and Fiscal Governance in Melanesia," World Development, Elsevier, vol. 35(3), pages 439-453, March.
    3. Giovanni S. F. Bruno, 2005. "Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals," Stata Journal, StataCorp LP, vol. 5(4), pages 473-500, December.
    4. Mark McGillivray & Oliver Morrissey, 2000. "Aid fungibility in Assessing Aid: red herring or true concern?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 413-428, April.
    5. Bazoumana Ouattara, 2006. "Aid, debt and fiscal policies in Senegal," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(8), pages 1105-1122.
    6. Heller, Peter S, 1975. "A Model of Public Fiscal Behavior in Developing Countries: Aid, Investment, and Taxation," American Economic Review, American Economic Association, vol. 65(3), pages 429-445, June.
    7. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
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    Citations

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    Cited by:

    1. Morton, Alec & Arulselvan, Ashwin & Thomas, Ranjeeta, 2018. "Allocation rules for global donors," Journal of Health Economics, Elsevier, vol. 58(C), pages 67-75.
    2. Cruzatti C., John & Dreher, Axel & Matzat, Johannes, 2023. "Chinese aid and health at the country and local level," World Development, Elsevier, vol. 167(C).
    3. Joseph L. Dieleman & Michael Hanlon, 2014. "Measuring The Displacement And Replacement Of Government Health Expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 129-140, February.
    4. Łukasz Marć, 2015. "The impact of aid on total government expenditures: New evidence on fungibility," WIDER Working Paper Series wp-2015-010, World Institute for Development Economic Research (UNU-WIDER).
    5. Morrissey, Oliver, 2015. "Aid and Government Fiscal Behavior: Assessing Recent Evidence," World Development, Elsevier, vol. 69(C), pages 98-105.
    6. Łukasz Marć, 2017. "The Impact of Aid on Total Government Expenditures: New Evidence on Fungibility," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 627-663, August.
    7. Becker, Johannes & Hopp, Daniel & Kriebel, Michael, 2020. "Mental accounting of public funds – The flypaper effect in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 321-336.
    8. Langlotz, Sarah & Potrafke, Niklas, 2019. "Does development aid increase military expenditure?," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 735-757.
    9. Ssozi, John & Amlani, Shirin, 2015. "The Effectiveness of Health Expenditure on the Proximate and Ultimate Goals of Healthcare in Sub-Saharan Africa," World Development, Elsevier, vol. 76(C), pages 165-179.
    10. Morton, Alec & Arulselvan, Ashwin & Thomas, Ranjeeta, 2018. "Allocation rules for global donors," LSE Research Online Documents on Economics 101210, London School of Economics and Political Science, LSE Library.
    11. Dykstra, Sarah & Glassman, Amanda & Kenny, Charles & Sandefur, Justin, 2019. "Regression discontinuity analysis of Gavi's impact on vaccination rates," Journal of Development Economics, Elsevier, vol. 140(C), pages 12-25.
    12. Langlotz, Sarah & Potrafke, Niklas, 2016. "Does development aid increase military expenditure?," Working Papers 0618, University of Heidelberg, Department of Economics.

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    More about this item

    Keywords

    foreign health aid; fungibility; public health expenditure;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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