Premium
Are Aid Flows Excessive or Insufficient? Estimating the Growth Impact of Aid in Threshold Regressions
Author(s) -
Kalyvitis Sarantis,
Stengos Thanasis,
Vlachaki Irene
Publication year - 2012
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2012.00582.x
Subject(s) - economics , aid effectiveness , econometrics , sample (material) , threshold model , regression , developing country , macroeconomics , statistics , mathematics , economic growth , chemistry , chromatography
Existing empirical studies and policy reports provide ambiguous results on the growth effect of foreign aid flows in the recipient countries. The present paper examines whether there exists an aid threshold that determines the growth impact of foreign aid. We use a threshold regression methodology to estimate growth specifications and the associated aid thresholds in a sample of 42 aid recipients covering the period 1970–2000. Our findings indicate that there is a threshold level of aid, above which the growth impact of aid becomes positive.