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Aid and Income: Another Time-Series Perspective

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  • Matthijs Lof
  • Tseday Jemaneh Mekasha
  • Finn Tarp

Abstract

In a recent article, Nowak-Lehmann, Dreher, Herzer, Klasen, and Martínez-Zarzoso (2012) (henceforth NDHKM) conclude that foreign aid has not had a significant effect on income, based on evidence from panel data potentially covering 131 countries over the period 1960-2006. The present study provides a replication of the empirical results reported by NDHKM. We uncover that NDHKM relied on a regression model that included a log transformation of variables that are not strictly positive. This led to a non-random omission of a large proportion of observations.

Suggested Citation

  • Matthijs Lof & Tseday Jemaneh Mekasha & Finn Tarp, 2013. "Aid and Income: Another Time-Series Perspective," WIDER Working Paper Series wp-2013-069, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2013-069
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