2008年-世界发展银行全球_Foreign_Aid_the_Real_Exchange_Rate_and_Economic_Growth_in_the_Aftermath_of_Civil_Wars_28页_216kb

Summary of "Foreign Aid, the Real Exchange Rate, and Economic Growth in the Aftermath of Civil Wars"

Core Content

This article examines the relationship between foreign aid, real exchange rate (RER) misalignment, and economic growth in the aftermath of civil wars. It analyzes the macroeconomic impact of aid flows using a panel dataset of 39 postconflict and 44 nonconflict countries over the period 1970–2004. The study investigates how these variables interact during the conflict cycle and how they affect long-term economic performance.

Main Views and Key Findings

1. Postconflict Aid Flows and RER Misalignment

• Postconflict countries experience a surge in foreign aid, which is typically higher than in nonconflict countries.
• Aid flows peak during the first year of peace (PeaceOnset), reaching about 11% of GDP.
• Aid declines in subsequent years, but remains higher than in the preconflict period during the early peace years (PostConf1).
• The real exchange rate (RER) tends to be overvalued during PeaceOnset and PostConf1, but returns to equilibrium in PostConf2.
• RER overvaluation is not directly caused by aid, but aid is a significant determinant of the equilibrium RER.

2. Aid and Economic Growth

• Foreign aid is a positive determinant of economic growth, especially in the postconflict period.
• However, aid exhibits decreasing returns to growth, and its positive effect is negatively interacted with RER overvaluation.
• RER overvaluation reduces growth, but this negative impact is ameliorated by financial development.
• Growth is initially negative in the year of peace attainment but improves in the following years, with a 2.1 percentage point increase during PostConf1 compared to PeaceOnset.

3. Aid, RER, and Output Recovery

• During the peace period, aid and RER misalignment are negatively correlated, suggesting that RER overvaluation may hinder output recovery.
• The correlation between aid and growth is not unambiguously positive, indicating that aid's impact depends on other factors such as institutional quality and policy effectiveness.

4. Methodology and Estimation Framework

• The study uses a multivariate behavioral model to estimate the equilibrium RER, incorporating variables like terms of trade, productivity, trade openness, government consumption, taxes on nontraded goods, aid, and net foreign income.
• Three econometric methods are applied: pooled mean group, mean group, and dynamic fixed-effects estimators.
• The pooled mean group estimator is chosen for its balance between consistency and efficiency in estimating the long- and short-run effects of RER determinants.

5. Policy Implications

• Postconflict policies should aim to use aid prudently, avoid RER misalignment, and support financial and capital market development to promote sustainable growth.
• The study highlights the importance of sectoral allocation of aid and currency composition of public savings in determining the macroeconomic outcomes.

Key Variables and Their Impact

Time Profile of Variables

• PrePeace: Aid is low, RER is undervalued, and growth is negative.
• PeaceOnset: Aid peaks at 11% of GDP, RER is overvalued, and growth turns positive.
• PostConf1: Aid declines, RER remains overvalued, and growth continues to rise.
• PostConf2: Aid and RER return to preconflict levels, and growth begins to decline slightly.

Conclusion

The study concludes that while foreign aid can be beneficial for postconflict growth, its effectiveness is undermined by RER overvaluation. Financial development can mitigate the negative effects of RER misalignment on growth. Therefore, postconflict countries should focus on prudent aid use, correcting exchange rate misalignments, and enhancing financial systems to achieve sustainable and stable economic growth.

Supporting Data

• Figure 1: Annual Aid Flows as a Share of GDP
• Figure 2: Real Effective Exchange Rate Misalignment
• Figure 3: Per Capita GDP Growth
• Table 1: Event-study estimations of differences in variable means across conflict periods
• Table 2: Pairwise correlations between aid/GDP, RER misalignment, and growth
• Table 3: Short- and long-run determinants of RER

References and Authors

• Authors: Ibrahim A. Elbadawi (World Bank), Linda Kaltani (IMF), Klaus Schmidt-Hebbel (Catholic University of Chile)
• JEL Codes: F5, F3, F43
• Journal: The World Bank Economic Review, Vol. 22, No. 1, pp. 113–140
• DOI: 10.1093/wber/lhm024
• Publication Date: February 7, 2008

Limitations and Considerations

• The study acknowledges that simple correlations do not imply causality.
• It emphasizes the need for multivariate analysis to account for nonlinearities, interactions, and reverse causality.
• The data used are limited to 1980–2004 due to the requirement for full data availability in the error-correction model.

This comprehensive analysis provides a framework for understanding the complex interactions between aid, RER, and growth in postconflict settings, offering important insights for policy design.