Abstract
AbstractThis chapter examines impacts of foreign aid on domestic borrowing, expenditure, and revenue, in Thailand from 1961 to 2014 by using VAR model and Granger causality tests. Our main findings are as follows. First, a negative relationship is found between foreign aid and domestic borrowing, which is considered to have an impact on Thailand’s fiscal budget. Second, a clear relationship is not necessarily evident about the relationship between foreign aid and governmental expenditure. Third, no relationship is seen between governmental revenue and foreign aid. Fourth, it is difficult to acquire evidence of the impact of foreign aid on fiscal budget if limited to the 1960s and the 1970s. Overall, foreign aid to Thailand has certain impact on its fiscal budget through diminishing domestic borrowing although this result is different if the period is limited to the 1960s and the 1970s.KeywordsForeign aidThailandFungibility
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