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| Jay Kathavate |
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| ''Corruption, aid volatility & growth'' |
| ( 2013, Vol. 33 No.2 ) |
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| This paper revisits the debate on foreign aid effectiveness from a different perspective by analysing the role of institutional corruption on the effect of aid volatility on the output of developing nations. A simple political economy model is developed to show the effect of corruption on rent-seeking activities of incumbent legislators and their subsequent effect on country output. This phenomenon is empirically tested using data on 77 aid-receiving countries from the span of 1984 to 2007 using GMM to control for potential endogeneity. |
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| Keywords: Aid Volatility, Corruption, Political Economy, Growth |
JEL: F3 - International Finance: General
O4 - Economic Growth and Aggregate Productivity: General |
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| Manuscript Received : Mar 21 2013 | | Manuscript Accepted : May 12 2013 |
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