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Does foreign aid play a role in the maintenance of economic growth? A non-linear analysis

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journal contribution
posted on 24.04.2019, 14:12 by Nermeen Harb, Stephen G. Hall
Should donors keep scaling up foreign aid or should they be more cautious because of the recipient country's limited absorptive capacity? This paper investigates the non-linearity hypothesis between foreign aid and economic growth for 25 developing countries during the period from 1984 to 2008. By using state space system equations, we provide a new insight to estimating the Panel Smooth Transition Regression Model (PSTR). This method identifies the estimated coefficients at each point of time and determines endogenously an appropriate threshold level. For upper middle countries, we recognise the positive impact of aid flows on economic growth but with diminishing returns while lower middle and least developed countries support the big push concept.

History

Citation

Quarterly Review of Economics and Finance, 2019

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/School of Business

Version

AM (Accepted Manuscript)

Published in

Quarterly Review of Economics and Finance

Publisher

Elsevier for University of Illinois at Urbana-Champaign, Bureau of Economic and Business Research

issn

1062-9769

Acceptance date

08/12/2018

Copyright date

2019

Publisher version

https://www.sciencedirect.com/science/article/pii/S1062976917302375?via=ihub

Notes

The file associated with this record is under embargo until 24 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.

Language

en

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Categories

Exports