Temple, J. and Van de Sijpe, N.M. orcid.org/0000-0003-0442-7020 (2017) Foreign Aid and Domestic Absorption. Journal of International Economics. ISSN 0022-1996
Abstract
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.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 Elsevier. This is an author produced version of a paper subsequently published in Journal of International Economics. Uploaded in accordance with the publisher's self-archiving policy. Article available under the terms of the CC-BY-NC-ND licence (https://creativecommons.org/licenses/by-nc-nd/4.0/) |
Keywords: | Foreign aid; Absorption; Dutch Disease; Common correlated effects |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 23 Aug 2017 15:14 |
Last Modified: | 05 Aug 2019 00:39 |
Published Version: | https://doi.org/10.1016/j.jinteco.2017.07.010 |
Status: | Published |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.jinteco.2017.07.010 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:120412 |