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Can the two new aid-growth models be replicated?

  • Peter Jensen


  • Martin Paldam


Recent aid effectiveness literature centers on two competing models from the family of conditional models: The Good Policy Model, where the key feature is policy times aid, and the Medicine Model, where it is aid squared. Both models were reached on a sample of 1/3 of the available data. The models are simplified to be replicatable on more of the data. Within-sample the Good Policy Model proves fragile, while the Medicine Model is more robust. Both models fail in out-of-sample replications. A semi-parametric technique is used to test for an unknown functional form of the aid-growth term. It rejects that aid is statistically significant. Copyright Springer Science + Business Media, Inc. 2006

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Article provided by Springer in its journal Public Choice.

Volume (Year): 127 (2006)
Issue (Month): 1 (April)
Pages: 147-175

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Handle: RePEc:kap:pubcho:v:127:y:2006:i:1:p:147-175
DOI: 10.1007/s11127-006-0865-4
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