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Business Cycle Fluctuations, Large Macroeconomic Shocks, and Development Aid

Domenii publicaţii > Economie + Tipuri publicaţii > Articol în revistã ştiinţificã

Autori: Era-Dabla Norris, Camelia Minoiu, and Luis-Felipe Zanna

Editorial: World Development, forthcoming, 2014.


We examine the cyclical properties of development aid using bilateral data for 22 donors and 113 recipients during 1970-2005. We find that bilateral aid flows are on average procyclical with respect to the business cycle in both donor and recipient countries. While aid outlays contract sharply during severe downturns in donor countries, they rise steeply when aidreceiving countries are hit by large adverse shocks. Our findings suggest that development aid may play an important cushioning role in developing countries, but only during times of
severe macroeconomic stress. Our results are robust to alternate definitions of aid flows, specifications, and estimation techniques.

Cuvinte cheie: foreign aid, bilateral donors, business cycle, macroeconomic shocks