Konferenzbeitrag
The Long-Run Effect of Foreign Aid on Domestic Output
This paper makes two main contributions. First, we examine the long-run effect of foreign aid on domestic output for 59 developing countries using heterogeneous panel cointegration techniques to control for omitted variable and endogeneity bias and to detect possible cross-country differences in the output effect of aid. The main result is that aid has, on average, a negative long-run effect on output, but there are large differences across countries (in about a third of cases the effect is positive). Second, we use a general-to-specific variable selection approach to systematically search for country-specific factors explaining the cross-country differences in the estimated long-run effect of aid. In contrast to previous studies, we find that aid effectiveness does not depend primarily on factors such as the quality of economic policy, the share of a country's area that is in the tropics, the level of democracy or political stability. The results suggest that the cross-country heterogeneity in the output effect of aid can be explained mainly by cross-country differences in law and order, religious tensions and government size.
- Sprache
-
Englisch
- Erschienen in
-
Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Effectiveness of Foreign Aid ; No. B19-V2
Foreign Aid
Macroeconomic Analyses of Economic Development
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Domestic output
Heterogeneous panel cointegration techniques
General-to-specific approach
Morrissey, Oliver
- Handle
- Letzte Aktualisierung
-
12.07.2024, 13:21 MESZ
Objekttyp
- Konferenzbeitrag
Beteiligte
- Herzer, Dierk
- Morrissey, Oliver
- Verein für Socialpolitik
Entstanden
- 2010
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