Does Foreign Aid Displace Domestic Taxation?

Paddy W Carter

Research output: Contribution to journalArticle (Academic Journal)peer-review


The existence of a negative relationship between aid and taxation would have far-reaching implications for international development agencies. This paper applies some recent methodological advances to the question and also discusses a range of problems with existing research. Previous results, which tend to show a negative relationship, are often based on econometric methods that rest on potentially restrictive assumptions. When more general methods, Panel Time Series estimators and the Group Fixed Effects estimator, are applied, there is little evidence that aid displaces domestic taxation.
Original languageEnglish
Pages (from-to)1-47
JournalJournal of Globalization and Development
Issue number1
Publication statusPublished - 11 Oct 2013

Structured keywords

  • PolicyBristolBusinessAndEconomicPolicy
  • PolicyBristolGovernanceAndPublicServices


  • Foreign Aid
  • Taxation


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