Aid and income: Another time-series perspective

Lof, Matthijs; Mekasha, Tseday Jemaneh; Tarp, Finn

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Aid and income: Another time-series perspective

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Title:	Aid and income: Another time-series perspective
Author(s):	Lof, Matthijs ; Mekasha, Tseday Jemaneh ; Tarp, Finn
Date:	2015
Language:	en
Pages:	19-30
Department:	Department of Finance
Series:	WORLD DEVELOPMENT, Volume 69
ISSN:	0305-750X
DOI-number:	10.1016/j.worlddev.2013.12.015
Keywords:	foreign aid, growth, time-series, VAR models
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Citation: Lof , M , Mekasha , T J & Tarp , F 2015 , ' Aid and income: Another time-series perspective ' , WORLD DEVELOPMENT , vol. 69 , pp. 19-30 . https://doi.org/10.1016/j.worlddev.2013.12.015
Abstract: This study provides a replication of the empirical results reported by Nowak-Lehmann, Dreher, Herzer, Klasen, and Martínez-Zarzoso (2012) (henceforth NDHKM). We uncover that NDHKM relied on a regression model which included a log transformation of variables that are not strictly positive. This led to nonrandom omission of a large proportion of observations. Furthermore, we show that NDHKM’s use of co-integrated regressions is not a suitable empirical strategy for estimating the causal effect of aid on income. Evidence from a Panel VAR model estimated on the dataset of NDHKM, suggests a positive and statistically significant long-run effect of aid on income.

Permanent link to this item: http://urn.fi/URN:NBN:fi:aalto-201705114103 Email this Export to RefWorks QR Code Print BibTex Tweet