World Bank Lending and the Quality of Economic Policy

Smets, Lodewijk ; Knack, Stephen

World Bank, Washington, DC

关键词: ACCOUNTABILITY;    ADJUSTMENT LOANS;    ADVERSE EFFECTS;    AGRICULTURE;    AIC;   

DOI  :  10.1596/1813-9450-6924
RP-ID  :  WPS6924

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This study investigates the impact ofWorld Bank development policy lending on the quality ofeconomic policy. It finds that the quality of policyincreases, but at a diminishing rate, with the cumulativenumber of policy loans. Similar results hold for thecumulative number of conditions attached to policy loans,although quadratic specifications indicate that additionalconditions may even reduce the quality of policy beyond somepoint. The paper measures the quality of economic policyusing the World Bank's Country Policy and InstitutionalAssessments of macro, debt, fiscal and structural policies,and considers only policy loans targeted at improvements inthose areas. Previous studies finding weaker effects ofpolicy lending on macro stability have failed to distinguishloans primarily intended to improve economic policy fromother loans targeted at improvements in sector policies orin public management. The paper also shows that investing ineconomic policy does not "crowd out" policyimprovements in other areas such as public sector governanceor human development. The results are robust to usingalternative indicators of policy quality, and correcting forendogeneity with system generalized methods of moments andcross-sectional two-stage least squares. The more positiveresults in the study relative to some previous studies basedon earlier loans are consistent with claims by the WorldBank that it has learned from its mistakes with traditionaladjustment lending.