Foreign aid and domestic absorption

• 成果类型: Article
• 署名作者: Temple, Jonathan; Van de Sijpe, Nicolas
• 署名单位: University of Bristol; University of Sheffield
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2017.07.010
• 发表日期: 2017
• 页码: 431-443
• 关键词: foreign aid; absorption; Dutch disease; Common correlated effects

摘要

This paper introduces a new 'supply-push' instrument for foreign aid, to be used together with an instrumental variable estimator that filters out unobserved common factors. We use this instrument to study the effects of aid on macroeconomic ratios, and especially the ratios of consumption, investment, imports and exports to GDP. We cannot reject the hypothesis that aid is fully absorbed rather than used to build foreign reserves or exiting as capital flight, nor do we find evidence of Dutch Disease effects. Aid leads to higher consumption, while the evidence that it promotes investment is less robust. (C) 2017 Published by Elsevier B.V.