蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
How Is Foreign Aid Spent? Evidence from a Natural Experiment
蝌蚪网 Journal: Macroeconomics
(pp. 225–44)
Abstract
We use oil price fluctuations to test the impact of transfers from wealthy OPEC nations to their poorer Muslim allies. The instrument identifies plausibly exogenous variation in foreign aid. We investigate how aid is spent by tracking its short-run effect on aggregate demand, national accounts, and balance of payments. Aid affects most components of GDP though it has no statistically identifiable impact on prices or economic growth. Much aid is consumed, primarily in the form of imported noncapital goods. Aid substitutes for domestic savings, has no effect on the financial account, and leads to unaccounted capital flight. (JEL F35, O19)Citation
Werker, Eric, Faisal Z. Ahmed, and Charles Cohen. 2009. "How Is Foreign Aid Spent? Evidence from a Natural Experiment." 蝌蚪网 Journal: Macroeconomics 1 (2): 225–44. DOI: 10.1257/mac.1.2.225Additional Materials
JEL Classification
- F35 Foreign Aid
- O19 International Linkages to Development; Role of International Organizations