The Fiscal Impact of Foreign Aid in Rwanda : A Theoretical and Empirical Analysis

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dc.creatorEzemenari, Kene
dc.creatorKebede, Ephraim
dc.creatorLahiri, Sajal
dc.date2012-05-29T18:58:09Z
dc.date2012-05-29T18:58:09Z
dc.date2008-02
dc.date.accessioned2026-07-01T01:19:06Z
dc.descriptionThe inflow of large quantities of foreign aid into Rwanda since 1994 can have potential adverse effects such as aid dependency via a significant negative effect on tax efforts and on public investments. This paper carries out a theoretical and empirical study to examine these issues. The theoretical part develops a model in which the recipient government decides on the optimal level of tax and optimally allocates total government revenue between current expenditure and public investment. The theoretical model makes it possible to empirically test whether an increase in aid is likely to reduce the optimal tax rate and the proportion of public expenditure allocated to public investment. The econometric analysis uses time series data on Rwanda to show, in line with other studies in the literature, a negative relationship between increased aid and the tax rate; but the magnitude of the effects are extremely small. In the case of Rwanda, reforms to the tax administration and expansion of the tax base have had mitigating effects. As far as the effect on public investment, the overall effect was negative in the past; however, since 1995 the direction of this effect has changed.
dc.formatapplication/pdf
dc.formattext/plain
dc.identifierhttp://documents.worldbank.org/curated/en/2008/02/9046104/fiscal-impact-foreign-aid-rwanda-theoretical-empirical-analysis
dc.identifierhttps://hdl.handle.net/10986/6591
dc.identifierhttps://doi.org/10.1596/1813-9450-4541
dc.identifier.urihttp://hdl.handle.net/123456789/417000
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relationPolicy Research Working Paper; No. 4541
dc.rightsCC BY 3.0 IGO
dc.rightshttp://creativecommons.org/licenses/by/3.0/igo/
dc.rightsWorld Bank
dc.subjectADVERSE EFFECTS
dc.subjectAGRICULTURE
dc.subjectAMORTIZATION
dc.subjectBALANCE OF PAYMENTS
dc.subjectBUDGET CONSTRAINT
dc.subjectCALCULATION
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL GRANTS
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMODITY
dc.subjectCOMPETITIVENESS
dc.subjectCONSTANT RETURNS TO SCALE
dc.subjectCONSUMER
dc.subjectCONSUMERS
dc.subjectCONSUMPTION EXPENDITURE
dc.subjectCONTRIBUTION
dc.subjectCURRENCY
dc.subjectCURRENT EXPENDITURE
dc.subjectDEBT
dc.subjectDEBT FORGIVENESS
dc.subjectDEBT OUTSTANDING
dc.subjectDERIVATIVE
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT ASSISTANCE
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT PROJECTS
dc.subjectDISBURSEMENTS
dc.subjectDISCOUNTED VALUE
dc.subjectDOMESTIC BORROWING
dc.subjectDOMESTIC DEBT
dc.subjectDUMMY VARIABLE
dc.subjectECONOMETRIC ANALYSIS
dc.subjectECONOMIC DIFFICULTIES
dc.subjectECONOMIC MANAGEMENT
dc.subjectECONOMIC RECOVERY
dc.subjectENDOGENOUS VARIABLES
dc.subjectENDOWMENTS
dc.subjectEQUATIONS
dc.subjectEXCESS LIQUIDITY
dc.subjectEXCHANGE RATE
dc.subjectEXCLUSION
dc.subjectEXOGENOUS VARIABLES
dc.subjectEXPENDITURE
dc.subjectEXPORTS
dc.subjectFISCAL BEHAVIOR
dc.subjectFISCAL PERFORMANCE
dc.subjectFISCAL POLICY
dc.subjectFOREIGN DIRECT INVESTMENT
dc.subjectFOREIGN EXCHANGE
dc.subjectFOREIGN LOAN
dc.subjectFOREIGN LOANS
dc.subjectGDP
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT REVENUE
dc.subjectGOVERNMENT SPENDING
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectGROWTH RATE
dc.subjectHOUSEHOLDS
dc.subjectINCOME
dc.subjectINCOME EFFECT
dc.subjectINFLATION
dc.subjectINSTRUMENT
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL TRADE
dc.subjectLABOR FORCE
dc.subjectLIQUIDITY
dc.subjectLOCAL GOVERNMENT
dc.subjectM2
dc.subjectMACROECONOMIC STABILITY
dc.subjectMARGINAL COST
dc.subjectMARGINAL UTILITY
dc.subjectMONETARY MANAGEMENT
dc.subjectMONEY SUPPLY
dc.subjectOPEN ECONOMY
dc.subjectOPTIMIZATION
dc.subjectPOLICY ENVIRONMENT
dc.subjectPOSITIVE EFFECTS
dc.subjectPRESENT VALUE
dc.subjectPRICE ELASTICITY
dc.subjectPRICE ELASTICITY OF DEMAND
dc.subjectPRINCIPAL REPAYMENTS
dc.subjectPRIVATE CAPITAL
dc.subjectPRIVATE GOODS
dc.subjectPRIVATE INVESTMENT
dc.subjectPRIVATE INVESTMENTS
dc.subjectPRIVATE SECTOR
dc.subjectPRODUCTION EFFICIENCY
dc.subjectPUBLIC
dc.subjectPUBLIC ECONOMICS
dc.subjectPUBLIC EXPENDITURE
dc.subjectPUBLIC GOOD
dc.subjectPUBLIC GOODS
dc.subjectPUBLIC INVESTMENT
dc.subjectPUBLIC INVESTMENTS
dc.subjectPUBLIC SECTOR
dc.subjectRATE OF GROWTH
dc.subjectRATE OF INTEREST
dc.subjectRATE OF RETURN
dc.subjectREAL INCOME
dc.subjectRECEIPTS
dc.subjectREGRESSION ANALYSIS
dc.subjectRESOURCE ALLOCATION
dc.subjectRETURNS
dc.subjectSALES
dc.subjectSAVINGS
dc.subjectSOCIAL EXPENDITURE
dc.subjectT-BILL
dc.subjectT-BILLS
dc.subjectTAX
dc.subjectTAX CODE
dc.subjectTAX COLLECTION
dc.subjectTAX RATE
dc.subjectTAX REVENUE
dc.subjectTAX RULES
dc.subjectTAXATION
dc.subjectTOTAL COST
dc.subjectTREASURY
dc.subjectTREASURY BILLS
dc.subjectTYPES OF INVESTMENTS
dc.subjectUTILITY FUNCTION
dc.titleThe Fiscal Impact of Foreign Aid in Rwanda : A Theoretical and Empirical Analysis

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