This paper makes two main contributions. First, we examine the long-run effect of foreign aid on domestic output for 59 developing countries using heterogeneous panel cointegration techniques to control for omitted variable and endogeneity bias to detect possible cross-country differences in the...

In the study "Do elites benefit from democracy and foreign aid in developing countries" (Journal of Development Economics, 2009) Bjørnskov asks if political elites benefit from foreign aid relative to the rest of the population. He concludes that his results provide qualified support for the...

We propose a repeated moral hazard model with full commitment and limited punishment to study the problem of aid allocation in environments characterized by asymmetric information. The donor (principal) finances a three-period development program and the elite of the recipient country (agent),...

This paper investigates the determinants of the real exchange rate (RER) in Ethiopia. In particular, it assesses whether large capital inflows (e.g. foreign aid and remittances) have an impact on the RER. This empirical exercise tries to improve the current literature in a number of ways: (i)...

This paper focuses on the macroeconomic management of large inflows of foreign aid. It investigates the extent to which African countries have coordinated fiscal and macroeconomic responses to aid surges. In practice, we construct a panel dataset to investigate the level of aid 'absorption' and...

This paper uses the cointegrated vector autoregressive (CVAR) model to assess the dynamic relationship between foreign aid inflows, public expenditure, revenue and domestic borrowing in Ethiopia. It departs from the existing literature by using a unique quarterly fiscal dataset (1993-2008) and...

Focusing on seven bilateral donors over a 25 year period, the paper answers 4 questions related to aid allocation practice. Questions one and two examine allocation differences between donors and time periods. Questions three and four relate to changes in poverty and policy selectivity. To...

This study examines survival patterns in a large, representative panel of Ugandan nongovernmental organizations (NGOs) between 2002 and 2008. It finds no evidence that more effective or more altruistic NGOs have a greater likelihood of survival. The main determinant of survival appears to be...

The link between foreign aid and economic growth remains a controversial issue in the literature, and a large share of the disagreement could be explained by differences in the data employed. Using GDP data from three different versions of the Penn World Table and the World Development...

Since the late 1990s a selection on policy approach to aid was advocated such that more aid should be allocated to countries with good policies. A number of donors accepted this recommendation, including the World Bank, but there is little evidence that this has occurred. Donors, including the...