Open AccessThe Aid, Macroeconomic Policy Environment and Growth Nexus: Evidence from Selected Asian Countries
Author(s) -
Saima Liaqat,
Hafiz Khalil Ahmad,
Temesgen Kifle,
Mohammad Alauddin
Publication year - 2019
Publication title -
the lahore journal of economics
Language(s) - English
Resource type - Journals
eISSN - 1811-5446
pISSN - 1811-5438
DOI - 10.35536/lje.2019.v24.i1.a4
Subject(s) - economics , nexus (standard) , aid effectiveness , liberian dollar , us dollar , macroeconomics , panel data , construct (python library) , monetary economics , developing country , development economics , econometrics , exchange rate , economic growth , finance , computer science , programming language , embedded system
This study empirically investigates the aid effectiveness debate in light of the Burnside-Dollar (2000) hypothesis that the recipient country’s policy environment is critical for aid effectiveness. Based on data from ten Asian countries for 1984–2015 and in line with Burnside and Dollar (2000), we construct a new composite policy index. Employing two-stage least squares to estimate the model, we find that aid had a negative impact on economic growth during the study period for these countries, thus refuting the Burnside-Dollar aid effectiveness hypothesis.