The Economics of Foreign Aid: Time Series Evidence from a Less Developed Country (LDC)


Md Mahadee Hassan

Abstract


Empirical literature on aid-growth nexus mostly centered within cross-country framework exploiting typical ordinary least squares (OLS) estimation. As a result, scarcity prevails studies empirically examine country-specific causes of aid-growth nexus exercising distinct methods. This study aims to fill this gap, taking the case of Bangladesh- a leading aid recipient country. Empirical findings based on vector error correction modeling and Granger causality test unearth absence of long-run and short-run causality of aid on GDP growth. Therefore, this study argues that although aid remains a major component of LDCs macroeconomic framework; however, it is yet to emerge as a significant player in their economic growth. 

 


Keywords


Aid-growth nexus, Vector error correction modeling, Causality, Bangladesh.

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About this article

Title

The Economics of Foreign Aid: Time Series Evidence from a Less Developed Country (LDC)

Keywords

Aid-growth nexus, Vector error correction modeling, Causality, Bangladesh.

DOI

10.20448/journal.501.2017.42.75.90

Date

2017-10-21

Additional Links

Manuscript Submission

Journal

Asian Journal of Economics and Empirical Research
Vol 4, No 2 (2017) Page: 75-90

Print ISSN

2518-010X

Online ISSN

2409-2622

Statistics

134 Views | 72 Downloads

Citations

0

Authors & Affiliations

Md Mahadee Hassan
Deputy Secretary, Economic Relations Division, Ministry of Finance, and Government of Bangladesh
Bangladesh


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