On the simultaneity problem in the aid and growth debate
This paper shows that foreign aid has a signicant positive average effect on real per capita GPD growth if, and only if, the quantitatively large negative reverse causal effect of per capita GDP growth on foreign aid is adjusted for in the growth regression. Instrumental variables estimates yield that a 1 percentage point increase in GDP per capita growth decreased foreign aid by over 4 percent. Adjusting for this quantitatively large, negative reverse causal effect of economic growth on foreign aid yields that a 1 percent increase in foreign aid increased real per capita GDP growth by around 0.1 percentage points.
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Volume (Year): 28 (2013)
Issue (Month): 1 (01)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- de Ree, Joppe & Nillesen, Eleonora, 2009.
"Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa,"
Journal of Development Economics,
Elsevier, vol. 88(2), pages 301-313, March.
- J. de Ree & E. Nillesen, 2006. "Aiding Violence or Peace? The Impact of Foreign Aid on the Risk of Civil Conflict in Sub-Saharan Africa," Working Papers 06-09, Utrecht School of Economics.
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