Foreign aid, taxes, and public investment

Ira Gang, Haider Ali Khan

Research output: Contribution to journalArticle

71 Citations (Scopus)

Abstract

Using time-series data for India, we test the foreign aid-public investment hypothesis. Behavioral equations derived from a maximizing framework are estimated after correcting for econometric and data inadequacies of earlier models. The results confirm earlier findings regarding the negative relationship between taxes and government investment in the presence of aid. However, in contrast to the earlier work, we find that grants and loans generally go into development projects with no leakages into consumption. Moreover, bilateral aid actually pulls resources out of consumption and puts them into development projects.

Original languageEnglish (US)
Pages (from-to)355-369
Number of pages15
JournalJournal of Development Economics
Volume34
Issue number1-2
DOIs
StatePublished - Jan 1 1990

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public investment
development project
aid
taxes
econometrics
loan
leakage
time series
grant
India
resource
resources
consumption
tax
public
Public investment
Foreign aid
Development projects
Tax
public aid

All Science Journal Classification (ASJC) codes

  • Development
  • Economics and Econometrics

Cite this

Gang, Ira ; Ali Khan, Haider. / Foreign aid, taxes, and public investment. In: Journal of Development Economics. 1990 ; Vol. 34, No. 1-2. pp. 355-369.
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Foreign aid, taxes, and public investment. / Gang, Ira; Ali Khan, Haider.

In: Journal of Development Economics, Vol. 34, No. 1-2, 01.01.1990, p. 355-369.

Research output: Contribution to journalArticle

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