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Follow the leader! The peer effect in aid supply decisions

Alessandro De Matteis

Development Policy Review, 2018, vol. 36, issue 6, 631-648

Abstract: This study assesses the existence of imitative behaviour among donors in terms of their aid supply. The urgency in addressing this subject is motivated by an increasing degree of aid volatility and unpredictability which may be linked to this imitative behaviour. Our results highlight that while any connection among donor peers is a potential channel for the transmission of aid volatility, the extent of such volatility decreases significantly in the presence of established imitative behaviour. This result suggests that the promotion of donor imitative behaviour would contribute to containing the current and growing trend of volatility in aid supply.

Date: 2018
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Handle: RePEc:bla:devpol:v:36:y:2018:i:6:p:631-648