Journal article
Fiscal inertia, donor credibility, and the monetary management of aid surges
- Abstract:
- Donors cannot pre-commit to support scaled-up public spending programs on a continuing basis, nor can governments credibly commit to curtail expenditure rapidly in the event that aid revenues contract. An aid boom may therefore be accompanied by a credibility problem. When this is the case, the absorb-and-spend strategy recommended by the IMF leads to capital flight, higher inflation, and large current account surpluses inclusive of aid. The right policy package combines a critical minimum degree of fiscal restraint with reverse sterilization.
- Publication status:
- Published
- Peer review status:
- Not peer reviewed
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(Preview, Author's original, pdf, 373.1KB, Terms of use)
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- Publisher copy:
- 10.1016/j.jdeveco.2009.09.006
Authors
- Publisher:
- Elsevier
- Journal:
- Journal of Development Economics More from this journal
- Volume:
- 93
- Issue:
- 2
- Pages:
- 287-298
- Publication date:
- 2010-11-01
- DOI:
- ISSN:
-
0304-3878
- Keywords:
- UUID:
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uuid:54983f7e-144e-4da7-b591-c186b5a787a4
- Local pid:
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daisy:1403
- Source identifiers:
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1403
- Deposit date:
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2012-08-07
Terms of use
- Copyright holder:
- Elsevier BV
- Copyright date:
- 2010
- Notes:
- The version of this work that appears in ORA is by Edward Buffie, Christopher Adam, Stephen O'Connell, and Catherine Pattillo. Copyright 2009 Elsevier B.V. All rights reserved. NOTICE: this is the author's version of a work that was accepted for publication in Journal of Development Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Development Economics, 93, 2, (November 2010) DOI#10.1016/j.jdeveco.2009.09.006
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