Economics, Econometrics and Finance
4 years ago

External financing boosts economy but hampers domestic production in low-income countries.

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RePEc: Research Papers in Economics
Government Spending Effects in Low-income Countries
Wenyi Shen, Susan Yang, Luis‐Felipe Zanna

Paper Summary

Government spending in low-income countries is influenced by factors like aid, public investment efficiency, and home bias. Aid can increase the economy's resources but also affect the exchange rate. Public investment may not always boost domestic production due to efficiency issues.

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