Aid, Political Business Cycles and Growth in Africa

Chiripanhura, Blessing M.; Niño-Zarazúa, Miguel

Abstract

This study develops a model of opportunistic behaviour in which an incumbent government resorts to expansionary fiscal and/or monetary stimuli to foster economic growth and thus, maximize the probability of re-election. Using a panel dataset of 31 African countries covering the period 1980 to 2009, we test whether donor aid facilitates such political business cycles and investigate their effect on growth. We find evidence that donors, through guaranteeing support to incumbent governments, may unwittingly instigate political business cycles. With forbearance, and sometimes complicity by donors, aid seems to allow incumbent governments to instigate macroeconomic stimuli that ensure electoral victory with no fear of losing aid support.

Citation

Chiripanhura, B. M., & Niño-Zarazúa, M. (2015). Aid, Political Business Cycles and Growth in Africa. Journal of International Development, 27(8), 1387-1421. https://doi.org/10.1002/jid.3188

• Journal Article Type: Article
• Acceptance Date: Sep 9, 2015
• Publication Date: Nov 10, 2015
• Deposit Date: Jun 26, 2022
• Publicly Available Date: Jun 26, 2022
• Journal: Journal of International Development
• Print ISSN: 0954-1748
• Electronic ISSN: 1099-1328
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 27
• Issue: 8
• Pages: 1387-1421
• DOI: https://doi.org/10.1002/jid.3188
• Keywords: aid, growth, institutional quality, political business cycles, Africa
• Publisher URL: https://onlinelibrary.wiley.com/doi/full/10.1002/jid.3188
• Related Public URLs: https://www.wider.unu.edu/publication/aid-political-business-cycles-and-growth-africa