John Quiggin

The Austrians are not happy to think that other people think that they can’t do arithmetic and they have produced a very nifty regression analysis to explore the impact of foreign aid on the process of democratisation of developing nations. Nabamitta Dutta at West Virginia and Peter Lesson at George Mason are the authord of “The Amplification Effect: Foreign Aid’s Impact on Political Institutions”.

http://austrianeconomists.typepad.com/weblog/2007/05/the_amplificati.html

It is a long time since I was actively involved in regression modelling [Champion et al "A Regression Model of NSW Hospital Costs", Health Commission of NSW, 1978] and I hope they never dropped their deck of cards and lost their place in the line to get their one go on the computer for the day. Doing regression models is about as much fun as you can have with your clothes on even if the result is rendered dubious by the need to use third-best proxies for important variables in the equation. And I hope they have managed to avoid the pitfalls identified by Rodrick in his critique of panel studies and regression models to research economic growth.

The good thing about the result is that there is something there for everyone. The aid optimists think that aid helps democracy, and the model says that aid indeed helps somewhat democratic states to do better. The aid pessimists think that aid only makes things worse and the model says that dictators get fatter and more dictatorial on aid.They opt for an “amplification effect”, that aid amplfies tendencies in place at the time. The policy implications are clear enough for good and bad states but they note the problem with a group that are not especially good or bad but just indifferent, so should those states get aid or not?

In the spirit that Gide once said to Proust “I really admired your use of the pluperfect subjunctive”, I enjoyed the use of two-stage leasat squares and logged variables.

Rafe you know how to confuse illiterates. If I was a rich man, I might have known a “pluperfect subjunctive”.

This sort of report makes you wonder how guys like Zapatero and Co didn’t rate an Amnesty mention up front alongside Howard and Bush http://www.news.com.au/story/0,10117,21812441-401,00.html?from=public_rss
Amnesty International- now the feral rent-a-crowd in office attire.