Is two better than one? Effects on growth of Bank-Fund interaction
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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|Date of revision:||Jun 2010|
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- 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.
- Dreher, Axel & Klasen, Stephan & Raymond, James & Werker, Eric, 2010. "The costs of favoritism: Is politically-driven aid less effective?," Center for European, Governance and Economic Development Research Discussion Papers 97, University of Goettingen, Department of Economics.
- Axel Dreher & Stephan Klasen & James Raymond Vreeland & Eric Werker, 2010. "The Costs of Favoritism: Is Politically-driven Aid less Effective?," CESifo Working Paper Series 2993, CESifo Group Munich.
- Dreher, Axel & Klasen, Stephan & Vreeland, James Raymond & Werker, Eric, 2010. "The Costs of Favoritism: Is Politically-Driven Aid Less Effective?," IZA Discussion Papers 4820, Institute for the Study of Labor (IZA).
- Axel Dreher & Stephan Klasen & James Raymond Vreeland & Eric Werker, 2010. "The costs of favoritism: Is politically-driven aid less effective?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 26, Courant Research Centre PEG.