It is clear from the implications of growth theory that the impact of aid depends on how it affects savings, investment and government behaviour. In respect of low-income countries, which are the principal aid recipients and the economies for which the issue of the impact of aid on growth is...

Is aid subject to diminishing returns? This paper addresses this issue, thereby contributing to the literature on effective allocation of aid. We test the hypothesis of diminishing returns to aid. Using an appropriate econometric technique for detecting thresholds, we find that aid only becomes...

Theoretical predictions and empirical evidence on the impact of foreign aid and fiscal policy on growth are mixed. This paper examines the effect of fiscal variables (government expenditure and revenue) and aid on growth using annual time series data for Kenya over the period 1964 - 2002....