Aid and Income: Another Time-series Perspective
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Aid and Income : Another Time-series Perspective. / Lof, Matthijs; Mekasha, Tseday Jemaneh; Tarp, Finn.
In: World Development, Vol. 69, 2015, p. 19-30.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Aid and Income
T2 - Another Time-series Perspective
AU - Lof, Matthijs
AU - Mekasha, Tseday Jemaneh
AU - Tarp, Finn
PY - 2015
Y1 - 2015
N2 - This study provides a replication of the empirical results reported by Nowak-Lehmann, Dreher, Herzer, Klasen, and Martínez-Zarzoso (2012) (henceforth NDHKM). We uncover that NDHKM relied on a regression model which included a log transformation of variables that are not strictly positive. This led to nonrandom omission of a large proportion of observations. Furthermore, we show that NDHKM’s use of co-integrated regressions is not a suitable empirical strategy for estimating the causal effect of aid on income. Evidence from a Panel VAR model estimated on the dataset of NDHKM, suggests a positive and statistically significant long-run effect of aid on income.
AB - This study provides a replication of the empirical results reported by Nowak-Lehmann, Dreher, Herzer, Klasen, and Martínez-Zarzoso (2012) (henceforth NDHKM). We uncover that NDHKM relied on a regression model which included a log transformation of variables that are not strictly positive. This led to nonrandom omission of a large proportion of observations. Furthermore, we show that NDHKM’s use of co-integrated regressions is not a suitable empirical strategy for estimating the causal effect of aid on income. Evidence from a Panel VAR model estimated on the dataset of NDHKM, suggests a positive and statistically significant long-run effect of aid on income.
U2 - 10.1016/j.worlddev.2013.12.015
DO - 10.1016/j.worlddev.2013.12.015
M3 - Journal article
VL - 69
SP - 19
EP - 30
JO - World Development
JF - World Development
SN - 1873-5991
ER -
ID: 146205959