The role of the IMF and the World Bank in the former Eastern Bloc countries
Although the main responsibility for carrying out economic reforms in the countries of Central and Eastern Europe lies with these countries themselves, the transformation of the Soviet-style economic system into a market economy must be made easier by support from abroad. In this the International Monetary Fund and the World Bank will play an important part.
The EBRD: Redundant, or an important actor in the transformation of Eastern Europe?
Now in its second year of operation, the European Bank for Reconstruction and Development was the first new institution set up by the West to cope with the historical challenge of helping to transform the centrally planned economies of Eastern Europe into market economies. Strongly criticized for its lack of funds and its redundant profile when compared to the World Bank and the European Investment Bank, the “European Bank” is still struggling to assume an independent role in the transformation process and remains a controversial institution.
Speci fi cation Test for Panel Data Models with Interactive Fixed E ff ects ∗
In this paper, we propose a consistent nonparametric test for linearity in a large dimensional panel data model with interactive fixed effects. Both lagged dependent variables and conditional heteroskedasticity of unknown form are allowed in the model. We estimate the model under the null hypothesis of linearity to obtain the restricted residuals which are then used to construct the test statistic. We show that after being appropriately centered and standardized, the test statistic is asymptotically normally distributed under both the null hypothesis and a sequence of Pitman local alternatives by using the concept of conditional strong mixing that was recently introduced by Prakasa Rao (2009). To improve the finite sample performance, we propose a bootstrap procedure to obtain the bootstrap -value. A small set of Monte Carlo simulations illustrates that our test performs well in finite samples. An application to an economic growth panel dataset indicates significant nonlinear relationships between economic growth, initial income level and capital accumulation.