Abstract

http://ssrn.com/abstract=1750729
 


 



Business Cycle Fluctuations, Large Shocks, and Development Aid: New Evidence


Camelia Minoiu


International Monetary Fund (IMF)

Luis-Felipe Zanna


International Monetary Fund (IMF)

Era Dabla-Norris


International Monetary Fund (IMF)

October 2010

IMF Working Paper No. 10/240

Abstract:     
We examine the cyclical properties of development aid using bilateral data for 22 donors and over 100 recipients during 1970-2005. We find that bilateral aid flows are on average procyclical with respect to business cycles in donor and recipient countries. However, they become countercyclical when recipient countries face large adverse shocks to the terms-of-trade or growth collapses-thus playing an important cushioning role. Aid outlays contract sharply during severe donor economic downturns; this effect is magnified by higher public debt levels. Additionally, bilateral aid flows are higher in the presence of IMF programs and are more countercyclical for recipient countries with stronger institutions.

Number of Pages in PDF File: 40

Keywords: Aid flows, Bilateral aid, Business cycles, Developed countries, Developing countries, Development assistance, Economic growth, Economic models, External shocks, Fund, Terms of trade

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Date posted: February 1, 2011  

Suggested Citation

Minoiu, Camelia and Zanna, Luis-Felipe and Dabla-Norris, Era, Business Cycle Fluctuations, Large Shocks, and Development Aid: New Evidence (October 2010). IMF Working Papers, Vol. , pp. 1-39, 2010. Available at SSRN: http://ssrn.com/abstract=1750729

Contact Information

Camelia Minoiu (Contact Author)
International Monetary Fund (IMF) ( email )
1700 19th Street, NW
Washington, DC 20431
United States
2026239731 (Phone)
HOME PAGE: http://www.camelia-minoiu.com/
Luis-Felipe Zanna
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
Era Dabla-Norris
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
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