Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/54729
Authors: 
Knoll, Martin
Year of Publication: 
2011
Series/Report no.: 
School of Business & Economics Discussion Paper: Economics 2011/23
Abstract: 
The present paper explores the extent to which new joint General Budget Support (GBS) systems have been able to overcome the problems of aid dependency and negative fiscal incentives that can potentially result from high levels of on-budget aid. As approximately 90 percent of new joint GBS goes to sub-Saharan Africa, this analysis, which covers the period from 2000 to 2008, evaluates data from 37 sub-Saharan developing countries. According to fixed effect and system GMM estimations, joint GBS assistance - although highly discretionary - does not undermine recipients' revenue mobilization efforts. Indeed, on the contrary, while aid in general has no measurable impact on recipients' revenue performance, joint GBS programs are associated with higher revenue mobilization. This suggests that on-budget aid delivered under well-targeted conditionality successfully mitigates adverse fiscal incentives while substantially enhancing recipients' fiscal space.
Subjects: 
budget support
fiscal response
revenue mobilization
sub-Saharan Africa
JEL: 
C33
F35
O23
O55
Document Type: 
Working Paper

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