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Title:Does aid hinder tax efforts? More evidence PDF Logo
Authors:Alonso, José Antonio
Garcimartín, Carlos
Issue Date:2011
Series/Report no.:CREDIT Research Paper 11/04
Abstract:During recent years, new doubts about the effectiveness of international aid have emerged. One of the arguments employed to justify this sceptical view is that aid can hinder tax effort in developing countries. Nevertheless, empirical research on the aid-tax nexus is inconclusive and it shows some shortcomings in the tax database employed and in the variables considered in the estimation. The main goal of this article is to overcome these shortcomings. The main results are twofold: i) income distribution is a crucial determinant of tax revenues; and ii) once income distribution is taken into account, aid shows no significant impact on tax revenue; not even when we control for institutional quality.
Subjects:tax revenues
tax effort
international aid
aid effectiveness
income distribution
JEL:O10
O23
O43
Document Type:Working Paper
Appears in Collections:CREDIT Research Papers, The University of Nottingham

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