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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol, Emmanuelle / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Zulehner, Christine

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Volume 16, Issue 4


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

A Signal of Altruistic Motivation for Foreign Aid

Andrea CivelliORCID iD: http://orcid.org/0000-0003-2643-503X / Andrew W. Horowitz / Arilton Teixeira
Published Online: 2016-12-28 | DOI: https://doi.org/10.1515/bejeap-2016-0024


We develop a stylized theoretical model showing that countercyclical transfers from a wealthy donor to a poorer recipient generate a signal of altruistic donor motivation. Applying the model to OECD foreign aid (ODA) data we find the signal present in approximately one-sixth of a large set of donor–recipient pairs. We then undertake two out-of-model exercises to validate the signal: a logit regression of signal determinants and the growth effects of ODA from signal-positive pairs are compared to non-signal bearers. The logit indicates our signal meaningfully distinguishes donor–recipient pairs by characteristics typically associated with altruism. The growth exercise shows ODA from signal bearers displays stronger reverse causation and more positive long-run effects. Beyond foreign aid, our signal of altruistic motivation may be applicable to a wide range of voluntary transfers.

This article offers supplementary material which is provided at the end of the article.

Keywords: foreign aid; donor motivation; bilateral aid; altruism

JEL Classification: F35; F34; O47; O11; O19


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About the article

Published Online: 2016-12-28

Published in Print: 2016-10-01

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 16, Issue 4, 20160024, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2016-0024.

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