Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80892
Authors: 
Gravier-Rymaszewska, Joanna
Year of Publication: 
2012
Series/Report no.: 
WIDER Working Paper 2012/25
Abstract: 
The strong interdependence between the developed and developing worlds surfaced with the recent economic downturn. Due to the global character of the economy, the downturn affected not only the North but also the South. In addition, the Official Development Assistance (ODA) is subject to a pro-cyclical trend in aid which falls when donors encounter recession. We attempt to answer the question of whether and how donors adjust aid budgets in response to various macroeconomic shocks. The main objective of the study is to explore the channels as well as behavioural consequences of unexpected financial shocks on aid budget adjustments in the short run. Crises are found to affect aid budgets and their trend through two channels: directly through lower revenues and indirectly by increasing fiscal costs through exchange rates and financial volatility. In addition, this relationship between aid and the donor economy is not solely economic as the donor's internal political orientation also plays an important role.
Subjects: 
financial crisis
aid
donors
panel VAR
JEL: 
C33
F35
G01
O11
ISBN: 
978-92-9230-488-1
Document Type: 
Working Paper

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