 Foreign aid, external debt and governanceUnbreen Qayyum, Musleh-ud Din () and Adnan Haider Economic Modelling, 2014, vol. 37, issue C, 41-52 Abstract: This paper investigates the impact of foreign aid, external debt and governance on the economic growth by extending the Ramsey–Cass–Koopman's growth model in an open economy framework. Steady-state and short run analysis shows that external debt and foreign aid do not affect the growth rate of consumption but have level impact on consumption. Foreign aid and governance encourage the economic growth but external debt creates a burden on the economy. Both investment and saving are independent of external debt and thus the current account surplus. Foreign aid does not affect investment directly but it has a direct positive impact on the savings in the economy. Therefore, it is argued that improvements in the quality of governance will stimulate the output and consumption rapidly and it acts like a catalyst. Keywords: External debt; Foreign aid; Governance; Ramsey–Cass–Koopman model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:37:y:2014:i:c:p:41-52 DOI: 10.1016/j.econmod.2013.08.045 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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