The fiscal management of permanent and temporary foreign aid: Evidence from sub‐Saharan Africa

Abdelwahed, Loujaina

doi:10.1002/jid.3542

Cited by 2 publications

(1 citation statement)

References 42 publications

(110 reference statements)

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“…Extant studies have focused on windfalls such as foreign aid, oil royalties, and excessive tax collections. Focusing on foreign aid, Abdelwahed (2021) proposes that governments may respond differently depending on the persistence and magnitude of aid. She finds that a permanent aid shock increases government spending by more than the amount of aid.…”

Section: Revenue Windfall and Government Spendingmentioning

confidence: 99%

The interesting case of special and extraordinary items: What are they and how do they influence municipal government finances?

Ke,

Jimenez

2024

Public Budgeting & Finance

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One‐shot revenue shocks influence government budget decisions and service provision. However, how governments respond to transitory income remains a theoretical and empirical puzzle. The permanent income hypothesis posits that governments save windfalls to smooth expenditures, while other models predict spending increases. Empirical findings are inconclusive as the focus has been on revenues that are not truly transitory. The case of special and extraordinary gains allows us to investigate the effects of transitory resources. Taking advantage of the Governmental Accounting Standards Board's requirement that governments report such gains in their financial statements, this study examines the effects of gains on expenses for a sample of cities across 10 years. Using a staggered adoption event study design, we find that gains stimulate spending and that the size of gains matters before one observes the stimulatory effects. These results have substantial implications for budgetary transparency and fiscal sustainability in municipal governments.

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Section: Revenue Windfall and Government Spendingmentioning

confidence: 99%

The interesting case of special and extraordinary items: What are they and how do they influence municipal government finances?

Ke,

Jimenez

2024

Public Budgeting & Finance

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Fiscal Responses to Foreign Aid: Does the Permanence of Aid Matter?

Abdelwahed

2022

Journal of African Economies

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This paper shows that failing to distinguish between permanent (low frequency) and temporary (high frequency) aid results in misleading estimates of the fiscal responses to aid. I focus on foreign grants received by sub-Saharan Africa over the period 1990–2016, and I separately identify the fiscal responses to permanent and temporary foreign aid. Permanent and temporary aid generates fiscal responses that are meaningfully different on the components of expenditure and domestic borrowing. Temporary aid is associated with fiscal adjustments, such as lower domestic borrowing and increasing recurrent expenditure, while permanent aid is associated with higher public investments. Results provide important policy implications regarding the macroeconomic effects of foreign aid and the design of aid programs to developing countries.

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The fiscal management of permanent and temporary foreign aid: Evidence from sub‐Saharan Africa

Cited by 2 publications

References 42 publications

The interesting case of special and extraordinary items: What are they and how do they influence municipal government finances?

The interesting case of special and extraordinary items: What are they and how do they influence municipal government finances?

Fiscal Responses to Foreign Aid: Does the Permanence of Aid Matter?

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