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

Silvia Marchesi () and Emanuela Sirtori ()

No 189, Working Papers from University of Milano-Bicocca, Department of Economics

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.

New Economics Papers: this item is included in nep-fdg
Date: 2010-06, Revised 2010-06
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