Get access

Aid and Income Stabilization

Authors

  • S. Guillaumont Jeanneney,

    1. Centre d'Études et de Recherches sur le Développement International (CERDI), Université d'Auvergne CNRS, 65 boulevard François Mitterrand, 63000 Clermont-Ferrand, France
    Search for more papers by this author
  • S. J-A. Tapsoba

    Corresponding author
    1. International Monetary Fund, 70019th Street, N.W., Washington DC 20431, USA
      Guillaumont Jeanneney: Centre d'Études et de Recherches sur le Développement International (CERDI), Université d'Auvergne CNRS, 65 boulevard François Mitterrand, 63000 Clermont-Ferrand, France. Tel: +33-473684083 ; E-mail: s.guillaumont@u-clermont1.fr. Tapsoba: International Monetary Fund, 70019th Street, N.W., Washington DC 20431, USA. E-mail: stapsoba@imf.org.
    Search for more papers by this author

  • This research has benefitedfrom the support of the Fondation pour les Études et les Recherches sur le Développement International (FERDI). The authors would like to thank an anonymous referee, Patrick Guillaumont, Georges Mavrotas and Jean-Louis Combes for helpful comments and discussions. Jenny DiBiase provided useful editorial comments.

Guillaumont Jeanneney: Centre d'Études et de Recherches sur le Développement International (CERDI), Université d'Auvergne CNRS, 65 boulevard François Mitterrand, 63000 Clermont-Ferrand, France. Tel: +33-473684083 ; E-mail: s.guillaumont@u-clermont1.fr. Tapsoba: International Monetary Fund, 70019th Street, N.W., Washington DC 20431, USA. E-mail: stapsoba@imf.org.

Abstract

The potential stabilization of output shocks through official assistance flows is investigated is this paper. It contributes to the current debate on aid instability and argues that official assistance might cope with exogenous output shocks in recipient countries and stabilize resources available for national expenditure, including consumption and investment. High aid dependency and vulnerability to output shocks positively affect the stabilization property of aid. Contrasting with the current literature, the paper documents that aid volatility is not a significant determinant of the stabilizing or destabilizing impact of aid.

Get access to the full text of this article

Ancillary