Using a bivariate, dynamic version of the Heckman selection model, we estimate the effect of participation in International Monetary Fund (IMF) programs on economic growth. We find evidence that governments enter into agreements with the IMF under the pressures of a foreign reserves crisis but...

Political misalignment and greater ideological distance between donor and recipient governments may render foreign aid less effective by adding to transaction costs and eroding trust. In addition, development aid from the West may lead to adverse growth effects in the global South due to the...

In theory, the IMF could influence economic growth via several channels, among them advice to policy makers, money disbursed under its programs, and its conditionality. This paper tries to disentangle those effects empirically. Using panel data for 98 countries over the period 1970-2000 it...

The typical identification strategy in aid effectiveness studies assumes donor motives do not influence the impact of aid on growth. We call this homogeneity assumption into question, first constructing a model in which donor motives matter and then testing the assumption empirically.