Do IMF and World Bank programs induce government crises? An empirical analysis

Arbeitspapier

We examine whether and under which circumstances World Bank projects and IMF programs affect the likelihood of major government crises. Using a sample of more than 90 developing countries over the period 1970-2002, we find that crises are on average more likely as a consequence of Bank and Fund involvement. While the effects of the IMF to some extent depend on the model specification, those of the World Bank are shown to be robust to the choice of control variables and method of estimation. We also find that governments face an increasing risk to enter a crisis when they remain under an arrangement once the economy performs better. The (economic) conditions present when a new arrangement is initiated, however, do not affect the impact of Fund and Bank on the probability of a crisis. Finally, while crisis probability rises when a government turns to the IFIs itself, programs inherited by preceding governments do not affect the probability of a crisis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KOF Working Papers ; No. 200

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; International Lending and Debt Problems ; Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
• Subject: Political Crisis ; International Financial Institutions ; Politische Stabilität ; Anpassungsprogramm des IWF ; Entwicklungshilfe ; Entwicklungsländer ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dreher, Axel ; Gassebner, Martin
• Event: Veröffentlichung
• (who): ETH Zurich, KOF Swiss Economic Institute
• (where): Zurich
• (when): 2008

Further information

• DOI: doi:10.3929/ethz-a-005640669
• Handle: http://hdl.handle.net/10419/50429
• Last update: 10.03.2025, 11:41 AM CET