Article
Does foreign aid really raise per capita income? A time series perspective
Canadian Journal of Economics/Revue canadienne d'économique
(2012)
Abstract
We analyze the relationship between per capita income and foreign aid. We employ annual data and five‐year averages and carefully examine the time‐series properties of the data. Panel estimations with dynamic feasible generalized least‐squares (DFGLS) show that aid generally has an insignificant or minute negative significant impact on per capita income (particularly in highly aid‐dependent countries). This holds true for countries with different levels of human development and income, as well as for different regions. We also find that aid has a small positive impact on investment, but a significant negative impact on domestic savings (crowding out) and the real exchange rate (appreciation).
Disciplines
Publication Date
2012
Citation Information
Axel Dreher, Dierk Herzer, Inmaculada Martinez-Zarzoso, Felicitas Nowak-Lehmann D., et al.. "Does foreign aid really raise per capita income? A time series perspective" Canadian Journal of Economics/Revue canadienne d'économique Vol. 45 Iss. 1 (2012) p. 288 - 313 Available at: http://works.bepress.com/inma_martinez_zarzoso/50/