The authors develop a simple analytical framework that shows how the composition of public spending affects economic growth. Distinguishing between productive and unproductive government spending (that which complements private sector productivity and that which does not), they show that...

A foreign aid or foreign lending policy that focuses exclusively on project financing may have unintended consequences, report the authors. New research shows that aid intended for crucial social and economic sectors often merely substitutes for spending that recipient governments would have...

The public sector's performance in the Caribbean varies, in reducing poverty and in creating an enabling environment for growth. Barbados and the Bahamas have been the high performers, Guyana and the Dominican Republic have been sluggish, and the other Caribbean countries fall in between. In the...

Using economic principles, the author provides criteria for financing infrastructure services where consumption-related user charges can be levied effectively. In light of the suggested criteria, the author examines the experience of developing countries in financing publicly provided...

If a donor gives aid for a project that the recipient government would have undertaken anyway, the aid finances expenditures other than the intended project. The notion that aid in this sense may be"fungible"has recently received empirical support. The authors look at why aid isfungible or...

Using a model of aid fungibility, the authors examine the relationship between foreign aid and public spending. Based on a panel of cross-country and time-series data, their results show that roughly 75 cents of every dollar given in net development assistance goes to current spending and 25...

The authors examine the role of governance-measured by level of corruption and quality of bureaucracy-and ask how it affects the relationship between public spending and outcomes. Their main innovation is to see if differences in efficacy of public spending can be explained by quality of...

The debate on whether natural disasters cause significant macroeconomic impacts and indeed hinder development is ongoing. Most analyses along these lines have focused on impacts on gross domestic product. This paper looks beyond this standard national accounting aggregate, and examines whether...

East Asia has experienced a dramatic decrease in output growth volatility over the past 20 years. This is good news, as output growth volatility affects poor households because of coping strategies that have long-term, harmful consequences, and the overall economy through its negative impact on...

This paper analyzes the drivers and consequences of sudden stops of capital flows. It focuses on the impact of external vulnerability on the depth and length of sudden stop crises. The authors analyze 43 developing and developed countries between 1993 and 2006. They find evidence that external...