The Fiscal Impact of Aid Flows: Evidence from Ethiopia

Fiscal; Impact; Aid; Flows; Evidence; Ethiopia; Poverty

The Impact of Foreign Aid on Government Spending, Revenue and Domestic Borrowing in Ethiopia

The main aim of this Working Paper is to assess the impact of foreign aid inflows on public expenditure, revenue and domestic borrowing in Ethiopia. The paper provides a literature overview of the fiscal effects of aid, and then applies a fiscal response model to Ethiopian data for the period 1964-2005. Since the empirical literature finds little evidence of common cross-country patterns, this highlights the important role that country-specific circumstances play in determining fiscal outcomes. By studying the particular fiscal dynamics in Ethiopia, the paper finds that foreign aid has had a positive impact on government investment, while its effect on current expenditure has been less pronounced. Moreover, by disaggregating aid inflows into grants and foreign lending, the paper is able to analyse their specific roles and impacts. The results support the conclusion that aid inflows increase public investment, with loans having a stronger impact than grants. Both aid grants and loans have a strong negative effect on domestic borrowing, suggesting that aid and domestic financing are close substitutes. Finally, the results also appear to support the hypothesis that higher aid flows displace domestic revenues. However, this particular finding does not seem to be robust across the sample.Foreign Aid, Aid Effectiveness, Fiscal Response Literature, Ethiopia

New Numerical Results Indicate a Half-Filling SU(4) Kondo State in Carbon Nanotubes

Numerical calculations simulate transport experiments in carbon nanotube quantum dots (P. Jarillo-Herrero et al., Nature 434, 484 (2005)), where a strongly enhanced Kondo temperature T_K ~ 8K was associated with the SU(4) symmetry of the Hamiltonian at quarter-filling for an orbitally double-degenerate single-occupied electronic shell. Our results clearly suggest that the Kondo conductance measured for an adjacent shell with T_K ~ 16K, interpreted as a singlet-triplet Kondo effect, can be associated instead to an SU(4) Kondo effect at half-filling. Besides presenting spin-charge Kondo screening similar to the quarter-filling SU(4), the half-filling SU(4) has been recently associated to very rich physical behavior, including a non-Fermi-liquid state (M. R. Galpin et al., Phys. Rev. Lett. 94, 186406 (2005)).Comment: 7 pages, 7 figure