Fiscal Reforms and the Fiscal Effects of Aid in Uganda.

Lloyd, T., Morrissey, O. and Bwire, T., 2017. Fiscal Reforms and the Fiscal Effects of Aid in Uganda. Journal of Development Studies. (In Press)

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DOI: 0.1080/00220388.2017.1303677


A dynamic relationship between foreign aid and domestic fiscal variables in Uganda is analysed using a Cointegrated Vector Autoregressive model over the period 1972-2008. Results show that aid is a significant element of long-run fiscal equilibrium, is associated with increased tax effort and public spending, and reduced domestic borrowing. Shocks to tax revenue are the pulling forces, while those to domestic borrowing, government spending and aid are the pushing forces of the system. Aid has contributed to improved fiscal performance in Uganda, although the slow growth in tax revenue and regular aid shortfalls prevented sustaining a balanced budget inclusive of aid. In terms of policy, it is crucial to increase the reliability and predictability of aid, coordinate aid delivery systems and make aid more transparent. This involves effort on behalf of donors and the government.

Item Type:Article
Uncontrolled Keywords:domestic fiscal variables; aid; economic instability; ESAP; CVAR; common trends; Uganda
Group:Faculty of Management
ID Code:24496
Deposited By: Unnamed user with email symplectic@symplectic
Deposited On:18 Aug 2016 11:33
Last Modified:13 Jun 2017 15:16


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