Publication:
Aid, Shocks, and Growth

dc.contributor.author Collier, Paul
dc.contributor.author Dehn, Jan
dc.date.accessioned 2014-08-20T19:18:12Z
dc.date.available 2014-08-20T19:18:12Z
dc.date.issued 2001-10
dc.description.abstract Analysis of the relationship between aid and growth by Burnside and Dollar found that the better a country's policies, the more effective aid is in raising growth in that country. But this result has been criticized for being sensitive to choice of sample and for neglecting shocks. The authors incorporate export price shocks into the analysis of aid's effect on growth. They construct export price indices using the approach pioneered by Deaton and Miller. They locate shocks by differencing the indices, removing predictable elements from the stationary process, and normalizing the residuals. Extreme negative shocks are the bottom 2.5 percent tail of this distribution. Introducing these extreme shocks into the Burnside-Dollar regression, the authors find that they are highly significant: unsurprisingly, extreme negative shocks reduce growth. Once these shocks are included, the Burnside-Dollar results become robust to choice of sample. Moreover, the adverse effects of negative shocks on growth can be mitigated through offsetting increases in aid. Indeed, targeting aid to countries experiencing negative shocks appears to be even more important for aid effectiveness than targeting aid to countries with good policies. But the authors show that, overall, donors have not used aid for this purpose. en
dc.identifier http://documents.worldbank.org/curated/en/2001/10/1614893/aid-shocks-growth
dc.identifier.uri http://hdl.handle.net/10986/19508
dc.language English
dc.language.iso en_US
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Working Paper;No. 2688
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject ADVERSE EFFECTS
dc.subject AID
dc.subject AID ALLOCATION
dc.subject AVERAGE CHANGE
dc.subject COMMODITY PRICES
dc.subject DATA SET
dc.subject DEPENDENT VARIABLE
dc.subject DEVELOPING COUNTRIES
dc.subject DEVELOPMENT ASSISTANCE
dc.subject DEVELOPMENT ECONOMICS
dc.subject DEVELOPMENT ISSUES
dc.subject DEVELOPMENT RESEARCH
dc.subject ECONOMETRIC ANALYSIS
dc.subject ECONOMIC ACTIVITY
dc.subject ECONOMIC GROWTH
dc.subject ECONOMIC MODELS
dc.subject ECONOMIC REVIEW
dc.subject ECONOMIC STUDIES
dc.subject EXPLANATORY VARIABLES
dc.subject EXPORTS
dc.subject FOREIGN AID
dc.subject FOREIGN EXCHANGE
dc.subject GROWTH EFFECT
dc.subject GROWTH EPISODES
dc.subject GROWTH PROCESS
dc.subject GROWTH RATE
dc.subject GROWTH REGRESSIONS
dc.subject INCOME
dc.subject INCOME MEAN
dc.subject INCREASING GROWTH
dc.subject INTERNATIONAL TRADE
dc.subject MACROECONOMIC POLICY
dc.subject MACROECONOMICS
dc.subject NATIONAL INCOME
dc.subject NEGATIVE SHOCK
dc.subject NEGATIVE SHOCKS
dc.subject NEGATIVE TERMS
dc.subject OIL
dc.subject POLICY RESEARCH
dc.subject POSITIVE SHOCKS
dc.subject POVERTY REDUCTION
dc.subject PRICE CHANGES
dc.subject PRICE INDEX
dc.subject PRICE INDICES
dc.subject PRIVATE SECTOR
dc.subject PRODUCERS
dc.subject RECESSION
dc.subject REDUCING POVERTY
dc.subject SIGNIFICANT EFFECT
dc.subject TARGETING
dc.subject TAXATION
dc.subject TERMS OF TRADE
dc.subject UNEMPLOYMENT
dc.subject PRICE STABILIZATION
dc.subject TARGETED ASSISTANCE
dc.subject ECONOMIC SHOCKS
dc.subject AID FLOWS
dc.title Aid, Shocks, and Growth en
dspace.entity.type Publication
okr.crosscuttingsolutionarea Gender
okr.date.disclosure 2001-10-31
okr.doctype Publications & Research :: Policy Research Working Paper
okr.doctype Publications & Research
okr.docurl http://documents.worldbank.org/curated/en/2001/10/1614893/aid-shocks-growth
okr.globalpractice Macroeconomics and Fiscal Management
okr.globalpractice Education
okr.globalpractice Health, Nutrition, and Population
okr.globalpractice Poverty
okr.globalpractice Finance and Markets
okr.identifier.doi 10.1596/1813-9450-2688
okr.identifier.externaldocumentum 000094946_01102304052049
okr.identifier.internaldocumentum 1614893
okr.identifier.report WPS2688
okr.language.supported en
okr.pdfurl http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/11/06/000094946_01102304052049/Rendered/PDF/multi0page.pdf en
okr.topic Environmental Economics and Policies
okr.topic Education :: School Health
okr.topic Macroeconomics and Economic Growth :: Markets and Market Access
okr.topic Development Economics and Aid Effectiveness
okr.topic Poverty Reduction :: Inequality
okr.topic Gender :: Gender and Development
okr.unit Office of the Director, Development Research Group
okr.volume 1
relation.isSeriesOfPublication 26e071dc-b0bf-409c-b982-df2970295c87
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