IDEAS home Printed from https://ideas.repec.org/a/cup/intorg/v66y2012i02p329-358_00.html
   My bibliography  Save this article

Do IMF and World Bank Programs Induce Government Crises? An Empirical Analysis

Author

Listed:
  • Dreher, Axel
  • Gassebner, Martin

Abstract

We examine whether and under what circumstances World Bank and International Monetary Fund (IMF) programs affect the likelihood of major government crises. We find that crises are, on average, more likely as a consequence of World Bank programs. We also find that governments face an increasing risk of entering a crisis when they remain under an IMF or World Bank arrangement once the economy's performance improves. The international financial institution's (IFI) scapegoat function thus seems to lose its value when the need for financial support is less urgent. While the probability of a crisis increases when a government turns to the IFIs, programs inherited by preceding governments do not affect the probability of a crisis. This is in line with two interpretations. First, the conclusion of IFI programs can signal the government's incompetence, and second, governments that inherit programs might be less likely to implement program conditions agreed to by their predecessors.

Suggested Citation

  • Dreher, Axel & Gassebner, Martin, 2012. "Do IMF and World Bank Programs Induce Government Crises? An Empirical Analysis," International Organization, Cambridge University Press, vol. 66(02), pages 329-358, April.
  • Handle: RePEc:cup:intorg:v:66:y:2012:i:02:p:329-358_00
    as

    Download full text from publisher

    File URL: http://journals.cambridge.org/abstract_S0020818312000094
    File Function: link to article abstract page
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liesbet Hooghe & Gary Marks, 2015. "Delegation and pooling in international organizations," The Review of International Organizations, Springer, vol. 10(3), pages 305-328, September.
    2. Aidt, Toke & Albornoz, Facundo & Gassebner, Martin, 2010. "The Golden Halo and Political Transitions," Proceedings of the German Development Economics Conference, Hannover 2010 48, Verein für Socialpolitik, Research Committee Development Economics.
    3. Christoph Moser & Jan-Egbert Sturm, 2011. "Explaining IMF lending decisions after the Cold War," The Review of International Organizations, Springer, vol. 6(3), pages 307-340, September.
    4. Doris A. Oberdabernig, 2018. "Determinants of IMF lending: How different is Sub-Saharan Africa?," Economics Bulletin, AccessEcon, vol. 38(1), pages 136-145.
    5. repec:eee:jcecon:v:46:y:2018:i:1:p:157-173 is not listed on IDEAS
    6. Psofogiorgos, Nikolaos - Alexandros & Metaxas, Theodore, 2017. "IMF, Democracy and Economic Development: Review and Critique," MPRA Paper 79403, University Library of Munich, Germany.
    7. Soumyajit Mazumder, 2016. "Can I stay a BIT longer? The effect of bilateral investment treaties on political survival," The Review of International Organizations, Springer, vol. 11(4), pages 477-521, December.
    8. Rickard, Stephanie J. & Caraway, Teri L., 2018. "International demands for austerity: examining the impact of the IMF on the public sector," LSE Research Online Documents on Economics 86636, London School of Economics and Political Science, LSE Library.
    9. Kersting, Erasmus K. & Kilby, Christopher, 2016. "With a little help from my friends: Global electioneering and World Bank lending," Journal of Development Economics, Elsevier, vol. 121(C), pages 153-165.
    10. Timm M. Prein & Almuth Scholl, 2018. "The Impact of Bailouts on Political Turnover and Sovereign Default Risk," Working Paper Series of the Department of Economics, University of Konstanz 2018-04, Department of Economics, University of Konstanz.
    11. Li, Larry & Sy, Malick & McMurray, Adela, 2015. "Insights into the IMF bailout debate: A review and research agenda," Journal of Policy Modeling, Elsevier, vol. 37(6), pages 891-914.
    12. Beatrice D. Scheubel & Andrea Tafuro & Benjamin Vonessen, 2018. "STIGMA? WHAT STIGMA? A Contribution to the Debate on the Effectiveness of IMF Lending," CESifo Working Paper Series 7036, CESifo Group Munich.
    13. repec:spr:revint:v:12:y:2017:i:4:d:10.1007_s11558-016-9250-3 is not listed on IDEAS
    14. Lang, Valentin, 2016. "The Economics of the Democratic Deficit: The Effect of IMF Programs on Inequality," Working Papers 0617, University of Heidelberg, Department of Economics.

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:intorg:v:66:y:2012:i:02:p:329-358_00. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: http://journals.cambridge.org/jid_INO .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.