01983cas a2200253 a 4500 AALejournalIMF009779 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451868968 1018-5941 BD-DhAAL BD-DhAAL Aiyar, Shekhar. Where Did All the Aid Go? : An Empirical Analysis of Absorption and Spending / Shekhar Aiyar, Ummul Hasanath Ruthbah. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper examines the macroeconomic usage of aid using panel data for a broad sample of aid-recipients. By definition an increase in aid must go toward a reduction in the current account balance (absorbed aid), an increase in capital outflows, or reserve accumulation. It is found that short-run absorption is typically very low, with much aid exiting through the capital account. Moreover, aid spending, defined in terms of the increase in government fiscal expenditures as a result of aid, is significantly greater than aid absorption, implying that aid systematically leads to an injection of domestic liquidity in recipient economies. The evidence here may help illuminate the rather weak link between aid and growth found in the literature. It reinforces the case for greater coordination between fiscal and monetary authorities in response to aid inflows. Mode of access: Internet Ruthbah, Ummul Hasanath. IMF Working Papers; Working Paper ; No. 2008/034 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/034/001.2008.issue-034-en.xml IMF e-Library