Does it Take Two to Tango? Improving Cooperation between the IMF and the World Bank: Theory and Empirical Evidence

39 Pages Posted: 22 Feb 2014

See all articles by Silvia Marchesi

Silvia Marchesi

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Università degli Studi di Milano-Bicocca - Center for European Studies (CefES); University of Milan - Centro Studi Luca d'Agliano (LdA)

Laura Sabani

University of Florence

Multiple version iconThere are 2 versions of this paper

Date Written: October 2013

Abstract

This paper analyzes the impact of different governance structures on the degree of Bank-Fund cooperation, focusing on the quality of their information transmission. It compares the performance of a decentralized governance with that of a centralized one. A centralized structure better addresses the necessity of coordinating policy actions, but greater consistency in policy actions will be achieved at the expenses of a less satisfactory adaptation to "local conditions." It is shown that when the need for coordination is relevant, a centralized governance allows to achieve a greater level of overall payoffs. In the real world the governance structure of the two institutions is certainly decentralized. A testable implication of the model would then be to see whether Bank- Fund's coordination is really important for their impact on recipient countries. The empirical evidence shows that a Bank-Fund simultaneous intervention is beneficial to growth and that such beneficial effect is increasing with the willingness to coordinate of the two organizations. This evidence would then be in favor of a (more) centralized governance.

Keywords: IMF and WB conditionality, coordination, communication

JEL Classification: D83, F33, N2

Suggested Citation

Marchesi, Silvia and Sabani, Laura, Does it Take Two to Tango? Improving Cooperation between the IMF and the World Bank: Theory and Empirical Evidence (October 2013). Centro Studi Luca d'Agliano Development Studies Working Paper No. 357, Available at SSRN: https://ssrn.com/abstract=2399001 or http://dx.doi.org/10.2139/ssrn.2399001

Silvia Marchesi (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

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Milano, 20126
Italy
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HOME PAGE: http://https://sites.google.com/site/ssilviamarchesi/home

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

University of Milan - Centro Studi Luca d'Agliano (LdA)

Via P. Amedeo 34
Milano, Mi 20122
Italy

Laura Sabani

University of Florence ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

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