Essays on Foreign Aid & Government Spending in Sub-Saharan Africa (SSA)

Does foreign aid work or not? This question is as old as aid itself. Since the aftermath of the Marshall Plan of 1948, the world has seen a huge surge in the amount of foreign aid given to developing countries. Although foreign aid is one of the key policy tools at the disposal of high-income countries to assist low- and middle-income countries, geared toward the alleviation of poverty. However, there is much controversy surrounding the allocation and effectiveness of foreign aid. This thesis revisits the debate on the effectiveness of foreign aid in enhancing economic growth in the recipient country, and it also estimates the size of both the aid and fiscal multipliers in Sub-Saharan Africa (SSA). Recently, the SSA has received more foreign aid than any other region worldwide, which indicates the need to understand the macroeconomic and institutional factors that influence the effectiveness of foreign aid and the size of both the aid and fiscal multipliers in this region. Chapter 1 of this thesis focuses on the impact of aid on growth in developing countries. Chapters 2 and 3 estimate the size of both aid and government spending multipliers in the SSA, using a linear and nonlinear model, respectively. .. [edited by Author]