Lecture Notes: Financing for development

Pre 1: Measuring Aid

** David Roodman Open Philanthropy Project**

• Two kinds of aid rates: IMF unified and OECD DDRs

• IMF unified rate: low-income 4%, lower-middle +2%, upper middle 1%
  and the concessionality and interest rate is not continuous at some point

• The rate should also adjust for default risk

• His paper is criticized by David Vines, as against the purpose of aid, which is not for profit making

Pre 2: IT and Fiscal Capacity in a developing country: evidence from Ethiopia

Abebe Shimeles African Development Bank

• Facts: in 2006, the average GDP share of government revenue in low income countries was 12.1%. However, for high income OECD countries, the figure stood at 25.2%
• Tools: Advances in information technology (IT) offer a cheaper possibility for gathering and analyzing a large amount of data on tax payers
• Experiment: introducing ESRM (electronic sales reporting machine)

• ** Result**: VAT increased after introduced ESRM

  
  
  

  Pre and Post VAT
• ** Comment**: 1) seperate the groups and test for heteroskecity; 2) the VAT data is not for sure stationary,should do unit root model; 3) the corner solution in this case-those who was ruled out; 4) control for firm size; 5) endogenous problem: is ESRM creating some job opportunity and new business
• Another comment from macro guy: what about the cost of ESRM policy? geographical differences of ESRM?