Ira Gang
Rutgers University
Department of Economics
E-mail: gang@economics.rutgers.edu
Item Number: [J19]
Title: Foreign Aid, Taxes, and Public Investment
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.
Reference: Haider Ali Khan, Foreign Aid, Taxes, and Public Investment
(with Haider Ali Khan), Journal of Development Economics, 34 (1990)
355-369.
Co-Author Information:
Haider Ali Khan
Graduate School of International Studies, University of Denver
Rutgers University
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