The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis

TY - JOUR

T1 - The Long-Run Impact of Foreign Aid in 36 African Countries

T2 - Insights from Multivariate Time Series Analysis

AU - Juselius, Katarina

AU - Møller, Niels Framroze

AU - Tarp, Finn

N1 - JEL Classification: C32;F35;O11

PY - 2014/4

Y1 - 2014/4

N2 - We comprehensively analyse the long-run effect of foreign aid (ODA) on key macroeconomic variables in 36 sub-Saharan African countries from the mid-1960s to 2007, using a well-specified cointegrated VAR model as statistical benchmark. Results provide broad support for a positive long-run impact of ODA flows on the macroeconomy. In contrast, we find little evidence supporting the thesis that aid has been harmful. From a methodological point of view we highlight the importance of transparency in reporting results, especially when the hypothesis being tested differs from theoretical expectations, and we identify reasons for econometrically inadequate results in the literature.

AB - We comprehensively analyse the long-run effect of foreign aid (ODA) on key macroeconomic variables in 36 sub-Saharan African countries from the mid-1960s to 2007, using a well-specified cointegrated VAR model as statistical benchmark. Results provide broad support for a positive long-run impact of ODA flows on the macroeconomy. In contrast, we find little evidence supporting the thesis that aid has been harmful. From a methodological point of view we highlight the importance of transparency in reporting results, especially when the hypothesis being tested differs from theoretical expectations, and we identify reasons for econometrically inadequate results in the literature.

U2 - 10.1111/obes.12012

DO - 10.1111/obes.12012

M3 - Journal article

SN - 0305-9049

VL - 76

SP - 153

EP - 184

JO - Oxford Bulletin of Economics and Statistics

JF - Oxford Bulletin of Economics and Statistics

IS - 2

ER -