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Foreign Aid Flows And Real Exchange Rate: Evidence From Syria

  • H. Issa

    (Damascus University)

  • B. Ouattara


    (Economics Department, University of Wales Swansea)

This paper uses time series data from Syria for the period 1965 to 1997 to test the aid and ¡°Dutch disease¡± hypothesis. We employ the relatively new approach to cointegration, known as the Auto Regressive Distributed Lag (ARDL) approach. We find no support for this hypothesis neither in the long run nor in the short run. On the contrary, our results indicate that foreign aid flows are associated with depreciation of the real exchange rate. The main policy implication, based on the long run results, is that Syria can continue to receive aid without fears of impairing its export competitiveness.

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Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 33 (2008)
Issue (Month): 1 (June)
Pages: 133-146

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Handle: RePEc:jed:journl:v:33:y:2008:i:1:p:133-146
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  1. Elbadawi, Ibrahim A, 1999. "External Aid: Help or Hindrance to Export Orientation in Africa?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(4), pages 578-616, December.
  2. repec:fth:inseep:9645 is not listed on IDEAS
  3. Balassa, Bela, 1973. "Just How Misleading are Official Exchange Rate Conversions?: Comment," Economic Journal, Royal Economic Society, vol. 83(332), pages 1258-67, December.
  4. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics 9622, Faculty of Economics, University of Cambridge.
  5. White, Howard & Wignaraja, Ganeshan, 1992. "Exchange rates, trade liberalization and aid: The Sri Lankan experience," World Development, Elsevier, vol. 20(10), pages 1471-1480, October.
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