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Is two better than one? Effects on growth of Bank-Fund interaction

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  • Sivlai Marchesi
  • Emanuela Sirtori

Abstract

We estimate the impact on economic growth of the joint participation in both IMF and WB programs. More specifically, using panel data for 128 developing countries over the period 1982-2005, and employing 2SLS to control for the possible endogeneity of participation in an IMF/WB program, we find that even if the WB and the IMF do not boost growth when they operate by themselves, the interaction term between these two organization is positive and significant at conventional levels. However, when we restrict the sample to low and lower middle income countries only (for which Bank-Fund cooperation is more “formalized”) the coefficient of the interaction term is not significant. Thus, so far, a trade-off emerges between a greater precision in the definition of Bank-Fund cooperation and the reliability of the estimates due to an insufficient number of observations.

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  • Sivlai Marchesi & Emanuela Sirtori, 2010. "Is two better than one? Effects on growth of Bank-Fund interaction," Working Papers 189, University of Milano-Bicocca, Department of Economics, revised Jun 2010.
    • Handle: RePEc:mib:wpaper:189
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    1. Axel Dreher & Stephan Klasen & James Raymond Vreeland & Eric Werker, 2013. "The Costs of Favoritism: Is Politically Driven Aid Less Effective?," Economic Development and Cultural Change, University of Chicago Press, vol. 62(1), pages 157-191.
    2. Dollar, David & Svensson, Jakob, 2000. "What Explains the Success or Failure of Structural Adjustment Programmes?," Economic Journal, Royal Economic Society, vol. 110(466), pages 894-917, October.
    3. World Bank, 2008. "World Development Indicators 2008," World Bank Publications - Books, The World Bank Group, number 28241.
    4. World Bank, 2008. "World Development Indicators 2008," World Bank Publications - Books, The World Bank Group, number 11855.
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    Cited by:

    1. Morana, Claudio, 2013. "Oil price dynamics, macro-finance interactions and the role of financial speculation," Journal of Banking & Finance, Elsevier, vol. 37(1), pages 206-226.
    2. Silvia Marchesi & Laura Sabani, 2013. "Does it take two to tango? Improving cooperation between the IMF and the World Bank: theory and empirical evidence," Working Papers - Economics wp2013_20.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    3. Silvia Marchesi & Laura Sabani, 2013. "Does it take two to tango? How to improve cooperation between the IMF and the World Bank," Working Papers 232, University of Milano-Bicocca, Department of Economics, revised Feb 2013.

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