Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7393978 | World Development | 2015 | 12 Pages |
Abstract
This study provides a replication of the empirical results reported by Nowak-Lehmann, Dreher, Herzer, Klasen, and MartÃnez-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.
Related Topics
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Authors
Matthijs Lof, Tseday Jemaneh Mekasha, Finn Tarp,