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The macroeconomic impact of aid volatility

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  • Hudson, John
  • Mosley, Paul

Abstract

We analyse the impact of aid volatility on GDP/GNP shares of expenditure. Given the level of aid, positive and negative volatility reduce investment and government expenditure shares. But the former reduces import share and the latter increases consumers' expenditure share.

Suggested Citation

  • Hudson, John & Mosley, Paul, 2008. "The macroeconomic impact of aid volatility," Economics Letters, Elsevier, vol. 99(3), pages 486-489, June.
  • Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:486-489
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    References listed on IDEAS

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    1. Arellano, Cristina & Bulír, Ales & Lane, Timothy & Lipschitz, Leslie, 2009. "The dynamic implications of foreign aid and its variability," Journal of Development Economics, Elsevier, vol. 88(1), pages 87-102, January.
    2. Ale Bulir & A. Javier Hamann, 2003. "Aid Volatility: An Empirical Assessment," IMF Staff Papers, Palgrave Macmillan, vol. 50(1), pages 1-4.
    3. Paul Mosley & Abrar Suleiman, 2007. "Aid, Agriculture and Poverty in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 139-158, February.
    4. Robert Lensink & Oliver Morrissey, 2000. "Aid instability as a measure of uncertainty and the positive impact of aid on growth," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 31-49.
    5. Bulír, Ales & Hamann, A. Javier, 2008. "Volatility of Development Aid: From the Frying Pan into the Fire?," World Development, Elsevier, vol. 36(10), pages 2048-2066, October.
    6. Paul Mosley & John Hudson & Arjan Verschoor, 2004. "Aid, Poverty Reduction and the 'New Conditionality'," Economic Journal, Royal Economic Society, vol. 114(496), pages 217-243, June.
    7. Rodrik, Dani, 1990. "How should structural adjustment programs be designed?," World Development, Elsevier, vol. 18(7), pages 933-947, July.
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    Cited by:

    1. Brück, Tilman & Xu, Guo, 2012. "Who gives aid to whom and when? Aid accelerations, shocks and policies," European Journal of Political Economy, Elsevier, vol. 28(4), pages 593-606.
    2. Hudson, John, 2015. "Consequences of Aid Volatility for Macroeconomic Management and Aid Effectiveness," World Development, Elsevier, vol. 69(C), pages 62-74.
    3. Chen, Hong & Singh, Baljeet, 2016. "Official Development Assistance, Public Investment and Economic Growth in Asia and the Pacific," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 6(2), pages 73-96.
    4. T. Bhavan & Changsheng Xu & Chunping Zhong, 2011. "Growth effect of foreign aid and volatility in South Asia," International Journal of Development Issues, Emerald Group Publishing, vol. 10(3), pages 204-213, September.
    5. Agénor, Pierre-Richard & Aizenman, Joshua, 2010. "Aid volatility and poverty traps," Journal of Development Economics, Elsevier, vol. 91(1), pages 1-7, January.
    6. repec:bla:asiaps:v:4:y:2017:i:3:p:386-404 is not listed on IDEAS
    7. Annen, Kurt & Batu, Michael & Kosempel, Stephen, 2016. "Macroeconomic effects of foreign aid and remittances: Implications for aid effectiveness studies," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1136-1146.
    8. Museru, Malimu & Toerien, Francois & Gossel, Sean, 2014. "The Impact of Aid and Public Investment Volatility on Economic Growth in Sub-Saharan Africa," World Development, Elsevier, vol. 57(C), pages 138-147.
    9. Kurt Annen & Michael Batu & Stephen Kosempel, 2014. "A DSGE-RBC Approach to Measuring Impacts of Wealth Transfers," Working Papers 1404, University of Guelph, Department of Economics and Finance.

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