The contentious effect of foreign aid on real exchange rate in developing countries leading to Dutch disease necessitates further research since its impact can only be determined empirically. Using annual data gathered from the World Bank Development Index database with reference period of 1980...

The available evidence on the effects of aid on growth is notoriously mixed. We use a novel empirical methodology, a heterogeneous panel vector-autoregression model identified through factor analysis, to study the dynamic response of exports, imports, and per capita GDP growth to a global aid...