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

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  • Sivlai Marchesi

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  • 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.

Suggested Citation

  • 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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    File URL: http://dems.unimib.it/repec/pdf/mibwpaper189.pdf
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    References listed on IDEAS

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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.
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    Cited by:

    1. Silvia Marchesi & Laura Sabani, 2013. "Does it Take Two to Tango? Improving Cooperation between the IMF and the World Bank: Theory and Empirical Evidence," Development Working Papers 357, Centro Studi Luca d'Agliano, University of Milano.
    2. 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.
    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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