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Title:Aid effectiveness, debt relief and public finance response: Evidence from a panel of HIPCs PDF Logo
Authors:Cassimon, Danny
Van Campenhout, Bjorn
Issue Date:2007
Series/Report no.:Research Paper, UNU-WIDER, United Nations University (UNU) 2007/59
Abstract:Substantial amounts of debt relief have been granted to a set of low-income countries, as an alternative aid modality. Although the theoretical case for debt relief is firmly established, only empirical analysis can show whether debt relief is indeed a (more) effective mode of aid delivery. We investigate the linkages between debt relief and other fiscal variables such as current expenditure, government investment, taxation and domestic borrowing, in comparison to the effects of grants and concessional loans. We find that the fiscal impact of HIPC debt relief follows fairly complex dynamics. For example, debt relief initially reduces government investment, but the effect becomes positive after two years, well outperforming other modes of aid delivery. – HIPCs ; debt relief ; fiscal response ; aid effectiveness
JEL:F34
F35
O11
O19
ISBN:978-92-9230-006-7
Document Type:Working Paper
Appears in Collections:WIDER Research Papers, United Nations University (UNU)

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