Ayuda al desarrollo y respuesta fiscal en Centroamérica

Abstract

In the current global financial crisis, the improvement of aid effectiveness has become a priority for both donors and recipient countries. In this context, understanding the way in which recipient governments use aid is a crucial issue to assess its effectiveness. This article develops and estimates a fiscal response model with anticipated aid, being Costa Rica and Nicaragua the countries selected as case studies. The main assumption of the theoretical model is that some aid can be anticipated by the recipient governments, and so, it may have influence on their budgetary planning. The model estimation reveals a different fiscal response in each country, but with a common result in both countries: the foreign aid is predominantly earmarked for supporting the stabilisation function of fiscal policy, alleviating the needs of public financing.