Modelling the Fiscal Effects of Aid: An Impulse Response Analysis for Ghana

Abstract

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Assessing the Dynamic Interlinks between Government Expenditure and Government Expenditure Financing Modes �Evidence from Ghana

“…This is because we believe that aid and borrowing may not necessarily have the same effects on direct and indirect taxes. Thus the main difference between the present study on one hand and that of Osei et al (2003) and other previous but related studies on the other hand is that it we introduce the hypothesis that the responses of direct and indirect taxes respectively to borrowing-both external and domestic are different and also have the benefit of current data for the analysis to determine whether prevailing circumstances deviates from Osei et al(2003). The rest of the paper would be arranged in the following manner; Section II is devoted to examining the fiscal policy environment, trends in fiscal management and borrowing by the government of Ghana over the years.…”

“…Emmanuel Atta Anaman 49 The succeeding period however saw a modification of fiscal behaviour as government substantially disengaged from the previously pervasive role of the government in the economy, in line with the philosophy of the people in authority at the time and by virtue of the programme that they entered into with the Bretton Woods institutions, government at the time embarked on privatization of a good number of the state enterprises. Osei et al(2003) submit that from the 1960s to early 1970s , aid inflow was relatively insignificant and constituted about 2% of GDP and roughly around 12% of all revenues available to government. In the middle to the late 1970s, there was a shift in the behaviour of the government as government activities were driven essentially by monetary expansion through borrowing from the Bank of Ghana as domestic revenues sharply reduced on account of the decline in the real side economic activities precipitated by inappropriate policies introduced by the then military rulers coupled with adverse economic and external trade climate.…”

An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa

“…A negative relationship between aid and domestic revenue mobilization was found in Pakistan (Franco-Rodriguez et al, 1998), Zambia (Fagernas and Roberts, 2004a) and Cote d'Ivoire (McGillivray and Outtara, 2003). By contrast, a positive relationship between aid and revenue collection was found in Indonesia (Pack and Pack, 1990), Ghana (Osei et al, 2003), and Uganda and Malawi Roberts, 2004b, 2004c).…”

Innovative ways of making aid effective in Ghana: tied aid versus direct budgetary support

“…Eventually the continued inflows led to the Dutch disease situation: exports and private investment were crowded-out by to tight monetary policy. Also, the aid flows had a pervasive impact on the budget; it led to increases in spending, increased tax efforts and led to reductions in domestic borrowing (Osei et al, 2003). This finding is intuitively obvious since improved fiscal management and reductions in domestic borrowing are common policy conditionalities attached to aid.…”