EconPapers    
Economics at your fingertips  
 

Foreign Aid and Domestic Absorption

Jonathan Temple and Nicolas Van de Sijpe

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

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.

Keywords: Foreign Aid; Absorption; Dutch Disease. (search for similar items in EconPapers)
JEL-codes: F35 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2015-05-19, Revised 2015-05-22
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Journal of International Economics.

Downloads: (external link)
http://www.bristol.ac.uk/efm/media/workingpapers/w ... pdffiles/dp15658.pdf (application/pdf)

Related works:
Journal Article: Foreign aid and domestic absorption (2017) Downloads
Working Paper: Foreign Aid and Domestic Absorption (2014) Downloads
Working Paper: Foreign Aid and Domestic Absorption (2014) Downloads
Working Paper: Foreign Aid and Domestic Absorption (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:15/658

Access Statistics for this paper

More papers in Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK
Bibliographic data for series maintained by Vicky Jackson ().

 
Page updated 2024-11-05
Handle: RePEc:bri:uobdis:15/658