The ultimate measure of aid effectiveness is how aid affects the lives of poor people in developing countries. The huge literature on aid’s macroeconomic impact has remarkably little to say on this topic, and less still in terms of practical advice to government officials and aid...

There is a substantial literature evaluating the impact of aid at the macroeconomic level using cross-country regressions. However, despite econometric advances in recent years, there remain many flaws in this approach. Similar problems beset cross-country analysis of the impact of aid on...