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Measuring Aid Effectively in Tests of Aid Effectiveness

David Fielding and Stephen Knowles (stephen.knowles@otago.ac.nz)

No 704, Working Papers from University of Otago, Department of Economics

Abstract: In the extensive empirical literature on aid effectiveness, aid is always measured as a share of GDP. However, measuring aid in real dollars per capita is also consistent with standard growth theory. We show that the choice of denominator makes an enormous difference to the sign and significance of coefficients on aid variables in cross-country panel growth regressions. Our aim is to redirect attention towards the theoretical foundations of the growth literature.

Keywords: growth; aid effectiveness (search for similar items in EconPapers)
JEL-codes: O19 O40 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2007-03, Revised 2007-03
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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