A Statistical Model of Bilateral Cooperation

Publisher Website
Google Scholar
Abstract
In most situations of bilateral cooperation we can observe only whether or not potential partners actually cooperate. Yet we often want to know what factors lead the actors to enter into and continue cooperation. The model we develop—a dynamic version of bivariate probit with partial observability—permits one to estimate the probabilities that either of two parties would want to cooperate and to identify the factors that affect these probabilities. As an illustration, we focus on agreements between national governments and the International Monetary Fund. The model should have a wide applicability.