Work

The Short-Run Macroeconomic Impact of Foreign Aid to Small States: An Agnostic Time Series Analysis

Year: 2010

Type: article

Abstract: This paper investigates the short-run macroeconomic impact of aid in small developing countries (SDCs) by using a vector auto regression (VAR) model to study the impact of aid on net import (absorption) and domestic demand (spending). We focus on average country effects within two country sub-groups, and find substantial differences between ‘aid-dependent’ SDCs and other SDCs that are more dependent on natural resources, tourism or financial services. In aid-dependent SDCs, aid absorption more or less equals spending, although only half of the aid flow is absorbed and spent. In the non-aid-dependent group, aid does not seem to be absorbed or spent in any systematic fashion.

Source: The Journal of Development Studies

DOI: 10.1080/00220381003623848

Authors: Henrik Hansen, Derek Headey

Institutions: University of Copenhagen, International Food Policy Research Institute

Language: English

Topic: International Development and Aid

Subfield: Development

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2111114720

FWCI: 13.26

Cites: 43

Cited by: 59

Related to: 10