The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis

Research on aid effect is abundant in the literature and often leads to the opposite conclusion. Since most time series studies use data from the same public database, we now argue that this difference in results must be due to the use of different econometric models and methods. To investigate this, we conducted a comprehensive study of the long-term impact of foreign aid on the scope of major macroeconomic variables in 36 sub-Saharan countries of Africa from mid-1960s to 2007 . We used a clear (cointegrate) VAR (CVAR) model as a statistical benchmark. It represents a very specific general specific approach that provides a wide range of confidence intervals that empirically should include appropriate allegations. Based on rigorous statistical tests, our results broadly support the long-term positive impact of government development aid flows on macroeconomics. For example, we found that public development assistance has a positive impact on the investment in 33 of 36 countries, but there is little evidence to support the idea of ​​harmful aid. From a methodological point of view, our research documents the importance of transparency in the results report, especially when statistical zero does not satisfy the natural economic null hypothesis. Our research revealed three reasons for dissatisfaction of econometrics in the literature: not properly considering the root and discontinuities of units; imposing seemingly harmless but ineffective data transformations; Extrinsic

Abstract From the mid-1960s to 2007, we comprehensively analyzed the long-term impact of foreign aid (ODA) on major macroeconomic variables in 36 countries in sub-Saharan Africa, and identified a clear integrated VAR model as a statistical benchmark It adopted. As a result, it is widely supported that ODA flow has a long-term positive impact on the macro economy. In contrast, there is little evidence that aid is harmful. From a methodological point of view, especially when the tested hypothesis is different from the theoretical expectation, emphasize the importance of transparency in reporting the results and identify reasons for underestimating econometrics in the literature .

Long-term impact of foreign aid in 36 African countries: insights from multiple time series analyzes

Research on aid effect is abundant in the literature and often leads to the opposite conclusion. Since most time series studies use data from the same public database, we now argue that this difference in results must be due to the use of different econometric models and methods. To investigate this, we conducted a comprehensive study of the long-term impact of foreign aid on the scope of major macroeconomic variables in 36 sub-Saharan countries of Africa from mid-1960s to 2007 . We used a clear (cointegrate) VAR (CVAR) model as a statistical benchmark. It represents a very specific general specific approach that provides a wide range of confidence intervals that empirically should include appropriate allegations. Based on rigorous statistical tests, our results broadly support the long-term positive impact of government development aid flows on macroeconomics.

Long-term impact of foreign aid in 36 African countries: suggestions from multiple time series analyzes