5. Estimation results
In Table 4 are presented the estimation results for the ...nal speci...cation of our
model estimated as a bivariate probit. We have also estimated other sped..cations
of the model (not reported here for reasons of space). Overall the estimates are
good, in the sense that most of the economic factors enter the estimated equati ons
with the expected sign and many are signi.cant at conventional 5% signi.cance
level.
In the Fund arrangement equation, the expected signs are all con.rmed except
that of EDT which is negative rather than positive (but not signi.cant). All the
coe^ients’ P-values are at least 0.09, with an exception made for GDPPC, EDT
and BOP whose P-values are 0.27, and 0.15, respectively. The two identifying
variables GGC and BEF have a P-value of zero and 0.05, respectively. Thus, as
expected, it emerges a strong negative relation between the dependent variable
and the rate of growth of government consumption (GGC), the level of i nvestment
(GDI), the level of exports (EXP), the presence of arrears in interests payment
(IAR) and a positive relation with a disequilibrium in the BOP. It is con.rmed
the existence of a strong and positive relation between the dependent variable
and the dummy corresponding to the adoption of an IMF programme in the past
(BEF).
In the equation for the debt rescheduling, the expected signs are all con.rmed
with an exception made for EXP, BOP which are both positive instead of negative,
but not signi...cant. In this equation as well all the coe¢cients’ P-values are at
least 0.09, with an excepti on made for GDPPC, BOP and EXP which are highly
insigni.cant. What emerges is a close relation between a debt rescheduling and
(lack of) investments (GDI), the level ofa country’s indebtedness and the existence
of arrears in the payment of interest (IAR). Finally, the coe^ient of the dummy
IMF is posi tive and highly signi.cant (P-value equal zero) as expected. This
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