Corruption, aid volatility & growth
AbstractThis paper revisits the debate on foreign aid effectiveness from a different perspective by analysing the role of institutional corruption on the effect of aid volatility on the output of developing nations. A simple political economy model is developed to show the effect of corruption on rent-seeking activities of incumbent legislators and their subsequent effect on country output. This phenomenon is empirically tested using data on 77 aid-receiving countries from the span of 1984 to 2007 using GMM to control for potential endogeneity.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 33 (2013)
Issue (Month): 2 ()
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Aid Volatility; Corruption; Political Economy; Growth;
Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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