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AID, POLICIES, AND GROWTH: WHY SO MUCH CONFUSION?
Author(s) -
Jia Shaomeng,
Williamson Claudia R.
Publication year - 2019
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12418
Subject(s) - economics , aid effectiveness , liberian dollar , sample (material) , confusion , us dollar , selection (genetic algorithm) , econometrics , macroeconomics , public economics , exchange rate , developing country , economic growth , finance , psychology , chemistry , chromatography , psychoanalysis , artificial intelligence , computer science
We revisit the highly debated aid‐policy‐growth association. Our results overturn Burnside and Dollar's original findings by simply using new data over the same countries and years. Marginal effects from the extended sample (1962–2013) provide weak evidence that aid can promote growth in the presence of good policies. Post‐Cold War (1990–2013) analysis, however, reveals that aid can decrease growth at any level of policy. The overwhelming majority of the results suggest aid conditional on policy is ineffective. This debate continues because the results are highly sensitive to country‐year selection, choice of methodology, measurement of institutional quality, and growth rate measurement. ( JEL F35, O23, O40)