July 1, 2008 Thesis Open Access

ADDIS YIMER G/EGZIABHEAR

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  <identifier identifierType="DOI">10.20372/nadre:3063</identifier>
  <creators>
    <creator>
      <creatorName>ADDIS YIMER G/EGZIABHEAR</creatorName>
    </creator>
  </creators>
  <titles>
    <title>"THE FISCAL RESPONSE TO EXTERNAL AID: A VECTOR AUTOREGRESSIVE ANALYSIS (VAR) FOR ETHIOPIA"</title>
  </titles>
  <publisher>Zenodo</publisher>
  <publicationYear>2008</publicationYear>
  <dates>
    <date dateType="Issued">2008-07-01</date>
  </dates>
  <resourceType resourceTypeGeneral="Text">Thesis</resourceType>
  <alternateIdentifiers>
    <alternateIdentifier alternateIdentifierType="url">https://nadre.ethernet.edu.et/record/3063</alternateIdentifier>
  </alternateIdentifiers>
  <relatedIdentifiers>
    <relatedIdentifier relatedIdentifierType="DOI" relationType="IsVersionOf">10.20372/nadre:3062</relatedIdentifier>
    <relatedIdentifier relatedIdentifierType="URL" relationType="IsPartOf">https://nadre.ethernet.edu.et/communities/aau</relatedIdentifier>
    <relatedIdentifier relatedIdentifierType="URL" relationType="IsPartOf">https://nadre.ethernet.edu.et/communities/zenodo</relatedIdentifier>
  </relatedIdentifiers>
  <rightsList>
    <rights rightsURI="http://www.opendefinition.org/licenses/cc-by">Creative Commons Attribution</rights>
    <rights rightsURI="info:eu-repo/semantics/openAccess">Open Access</rights>
  </rightsList>
  <descriptions>
    <description descriptionType="Abstract">&lt;p&gt;The main objective of this study is to access the fiscal response to external aid inflows in Ethiopia, specifically&lt;br&gt;
to study the impact of foreign aid inflows on public expenditure, revenue and domestic borrowing in Ethiopia.&lt;br&gt;
The paper provides a critical review of literature on the aid-fiscal relation, and then applies a VAR/VECM&lt;br&gt;
and impulse response analysis, using data for the period 1961-2007.The study is a good indication that&lt;br&gt;
disaggregated data utilization could point out which variables are responsive to changes in external shocks. By&lt;br&gt;
studying the particular fiscal dynamics in Ethiopia using three separate models, the study finds that foreign aid&lt;br&gt;
in the form of grant and loan has had a positive impact on government expenditure (loan being pro-investment&lt;br&gt;
and grant being pro-consumption), both have a negative impact on domestic borrowing (domestic borrowing&lt;br&gt;
being more elastic to a change in grant) and indirect tax collection and no effect on the direct one. Moreover, by&lt;br&gt;
incorporating total ODA inflow in a separate model, the study tried to analyze the joint impact of budgetary&lt;br&gt;
grant and loan, and that of off -budgetary ODA. The results support the conclusion that aid inflows increase&lt;br&gt;
public expenditure and are biased to be pro- investment. While total ODA flows have a negative impact on&lt;br&gt;
revenue of the government and borrowing from domestic sources, suggesting that aid and domestic borrowing are&lt;br&gt;
close substitutes and that higher aid flows displace domestic revenues. In the final analysis to mitigate the&lt;br&gt;
undesirable impacts of aid, building a better national capacity to collect domestic revenue and regulatory&lt;br&gt;
schemes by donors to avoid possible problems of aid fungiblity should be put in place&lt;/p&gt;</description>
  </descriptions>
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