Purpose – The paper aims to investigate the possible crowding-out of regular development aid by global taxes. Design/methodology/approach – The paper models cross-country interactions in aid giving using a simple Cournot-Nash framework. Findings – The paper argues that global taxes could lead to an increase in aid-cum-tax revenue if such taxes produce a globally net positive income effect. Whether this condition can be satisfied is very much an open empirical issue. An alternative to global taxes is cooperative aid-giving among donors, which this paper shows will always result in more global aid. Originality/value – The paper highlights the need for a shift of policy focus from designing global taxes to designing viable mechanisms for effective aid coordination, for which multilateral institutions could play a crucial role.
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