How Volatile and Unpredictable are Aid Flows, and What are the Policy Implications?

No DP2001-143, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper examines empirical evidence on the volatility and uncertainty of aid flows, and the main policy implications. Aid is found to be more volatile than fiscal revenues—particularly in highly aid-dependent countries—and mildly procyclical in relation to activity in the recipient country. These findings imply that the current pattern of aid disbursements is welfare-reducing. We also find that uncertainty about aid disbursements is large and that the information content of commitments made by donors is either very small or statistically insignificant.

Keywords: Economic assistance and foreign aid; Econometric models (Economic development); Economic development projects; Fiscal policy (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (56)

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Working Paper: How Volatile and Unpredictable Are Aid Flows, and What Are the Policy Implications? (2001)
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