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

46 Pages Posted: 14 Oct 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 14, 2014

Abstract

In this paper we present a theoretical model which, focusing on the quality of information transmission between the IMF and the WB, analyzes the sources of the expected loss in the overall performance of the two institutions relative to the first best outcome, which is characterized by centralized decision and perfect information. In particular, given the Bank-Fund strong complementarities, we show that strategic communication is indeed the primary source of loss for the two institutions. A testable implication of the model is to relate Bank-Fund's performance to their willingness (or ability) to communicate. We find evidence that a Bank-Fund simultaneous loan is beneficial to growth and, consistently with the theory, such beneficial effect is reduced by factors preventing full communication, such as the degree of Bank-Fund competition and the salience of their private information.

Keywords: IMF and WB conditionality, coordination, communication

JEL Classification: D83, F33, N02

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 14, 2014). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 280, Available at SSRN: https://ssrn.com/abstract=2509676 or http://dx.doi.org/10.2139/ssrn.2509676

Silvia Marchesi (Contact Author)

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

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy
+39 02 64483057 (Phone)

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

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
68
Abstract Views
711
Rank
451,760
PlumX Metrics