Aid Volatility: An Empirical Assessment

This article examines empirical evidence on the volatility and uncertainty of aid flows and their main policy implications. Aid is found to be more volatile than fiscal revenues-particularly in highly aid-dependent countries-and shortfalls in aid and domestic revenue tend to coincide. The article also finds that uncertainty about aid disbursements is large and that the information content of commitments made by donors is either very small or statistically insignificant. Specific policies and broader international efforts to cope with these features of aid are briefly discussed.

[1]  W. Branson,et al.  Ownership and conditionality , 2000 .

[2]  Panos Varangis,et al.  Dealing with Commodity Price Uncertainty , 1996 .

[3]  Henrik Hansen,et al.  Aid effectiveness disputed , 2000 .

[4]  John Hudson,et al.  Aid, the public sector and the market in less developed countries: A return to the scene of the crime , 1992 .

[5]  Carol Lancaster,et al.  Aid Effectiveness in Africa: The Unfinished Agenda , 1999 .

[6]  Henrik Hansen,et al.  Aid and Growth Regressions , 2001 .

[7]  C. Barrett,et al.  Does Food Aid Stabilize Food Availability? , 1999, Economic Development and Cultural Change.

[8]  H. White,et al.  What do we know about aid's macroeconomic impact? An overview of the aid effectiveness debate , 1992 .

[9]  Michel A. Robe,et al.  Foreign Aid And The Business Cycle , 2001 .

[10]  Jakob Svensson,et al.  When is foreign aid policy credible : aid dependence and conditionality , 2000 .

[11]  A. Javier Hamann,et al.  How Volatile and Unpredictable are Aid Flows, and What are the Policy Implications? , 2001, SSRN Electronic Journal.

[12]  Sebastian Edwards,et al.  Disequilibrium and structural adjustment , 1989 .

[13]  Howard Pack,et al.  Foreign Aid and the Question of Fungibility , 1993 .

[14]  Robert Lensink,et al.  Aid instability as a measure of uncertainty and the positive impact of aid on growth , 2000 .

[15]  John Hudson,et al.  Aid, the Public Sector and the Market in Less Developed Countries , 1990 .

[16]  Howard Pack,et al.  Is Foreign Aid Fungible? The Case of Indonesia , 1990 .

[17]  P. Collier,et al.  Aid 'dependency': a critique , 1999 .

[18]  Ricardo J. Caballero.  Macroeconomic Volatility in Latin America: A Conceptual Framework and Three Case Studies , 2000 .

[19]  A. Alesina,et al.  Who Gives Foreign Aid to Whom and Why? , 1998 .

[20]  E. Engel,et al.  External shocks and stabilization mechanisms , 1993 .

[21]  Michel A. Robe,et al.  On the Welfare Cost of Business Cycles in Developing Countries , 2001 .