Artikel
Transfers in the gravity equation
This study integrates development aid into a theoretically founded structural gravity model that considers primary and secondary effects of aid as an income transfer and as a bilateral trade cost determinant. We identify the parameters of our model using a two-stage approach that includes a state-of-the-art Poisson pseudo-maximum likelihood gravity estimation for a sample of 132 countries over the period 1995 to 2012. The main findings indicate that bilateral aid only increases bilateral trade for countries that do not have a common language, a past colonial relationship or an RTA. On average, 1 USD of additional foreign aid from all donors increases recipients’ net imports by around 0.36 USD. Our comparative statics indicate that donors experience a reduction in real consumption due to aid and recipients an increase. We also analyze the effect on third countries. The modelling framework also applies to the study of other transfers such as remittances.
- Language
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Englisch
- Bibliographic citation
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Journal: Canadian Journal of Economics/Revue canadienne d'économique ; ISSN: 1540-5982 ; Volume: 54 ; Year: 2021 ; Issue: 1 ; Pages: 410-442 ; Hoboken, NJ: Wiley
- Classification
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Wirtschaft
- Event
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Geistige Schöpfung
- (who)
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Kruse, Hendrik W.
Martínez‐Zarzoso, Inmaculada
- Event
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Veröffentlichung
- (who)
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Wiley
- (where)
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Hoboken, NJ
- (when)
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2021
- DOI
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doi:10.1111/caje.12500
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Kruse, Hendrik W.
- Martínez‐Zarzoso, Inmaculada
- Wiley
Time of origin
- 2021
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