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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/46559
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| Title: | | Does conditionality work? A test for an innovative US aid scheme  |
| Authors: | | Öhler, Hannes Nunnenkamp, Peter Dreher, Axel |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Public Choice 3454 |
| Abstract: | | Performance-based aid has been proposed as an alternative to the failed traditional approach whereby donors make aid conditional on the reform promises of recipient countries. However, hardly any empirical evidence exists on whether ex post rewards are effective in inducing reforms. We attempt to fill this gap by investigating whether the Millennium Challenge Corporation (MCC) was successful in promoting better control of corruption. We employ a difference-in-difference-in-differences (DDD) approach, considering different ways of defining the treatment group as well as different time periods during which incentive effects could have materialized. We find evidence of strong anticipation effects immediately after the announcement of the MCC, while increasing uncertainty about the timing and amount of MCC aid appear to weaken the incentive to fight corruption over time. |
| Subjects: | | foreign aid corruption Millennium Challenge Corporation MCC effect |
| JEL: | | F35 O17 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Economists Online CESifo Working Papers, CESifo Group Munich
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