Not surprisingly, extreme negative export price shocks reduce growth. But these adverse effects can be mitigated through offsetting increases in aid. Indeed, targeting aid to countries experiencing negative shocks appears to be even more important for aid effectiveness than targeting aid to countries with good policies. Analysis of the relationship between aid and growth by Burnside and Dollar found that the better a country's policies, the more effective aid is in raising growth in that coun...Expand abstract
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Aid, Shocks, and Growth.
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