Abstract: In most situations of bilateral cooperation we can observe only if an agreement has been concluded and if it holds. Yet often we want to know what factors dispose the actors to enter and leave agreements. The model we develop – a dynamic version of bivariate probit with partial observability – permits to estimate the probabilities that either of the parties would enter or leave an agreement and to identify the factors that affect these probabilities. As an illustration, we focus on agreements between countries and the IMF, covering the period between 1970 and 1990. The model should have a wide applicability.
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