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Stop Interrupting: An Empirical Analysis of the Implementation of IMF Programs

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  • Arpac, Ozlem
  • Bird, Graham
  • Mandilaras, Alex

Abstract

Summary For many years the analysis of IMF conditionality overlooked the extent to which it was implemented. However, more recently, increasing attention has been paid to implementation. Theoretical contributions have focused on the importance of special interest groups, but empirical evidence has failed to provide compelling support for the theory. Indeed, empirical studies have reported mixed results that sometimes seem to be conflicting. This paper identifies a range of economic, political and institutional factors that may, in principle, influence implementation. Focusing in particular on the irreversible interruption of IMF programs, it tests an econometric model designed to capture these influences 'over 1992-2004' exploiting improved sources of data. The results suggest that significant determinants of interruption are trade openness, the existence of veto players and the amount of resources committed by the Fund. The paper interprets the results, tests their robustness, briefly examines cases that initially appear to be inconsistent with the overall findings and discusses the implications of the results for policy.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 36 (2008)
Issue (Month): 9 (September)
Pages: 1493-1513

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Handle: RePEc:eee:wdevel:v:36:y:2008:i:9:p:1493-1513

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: IMF implementation;

References

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  1. Anna Unigovskaya & Valerie Mercer-Blackman, 2000. "Compliance with IMF Program Indicators and Growth in Transition Economies," IMF Working Papers 00/47, International Monetary Fund.
  2. Graham Bird & Dane Rowlands, 2002. "The Pattern of IMF Lending: An Analysis of Prediction Failures," Journal of Economic Policy Reform, Taylor & Francis Journals, Taylor & Francis Journals, vol. 5(3), pages 173-186.
  3. Graham Bird & Dane Rowlands, 2001. "IMF lending: how is it affected by economic, political and institutional factors?," Journal of Economic Policy Reform, Taylor & Francis Journals, Taylor & Francis Journals, vol. 4(3), pages 243-270.
  4. Wolfgang Mayer & Alex Mourmouras, 2004. "IMF Conditionality and the Theory of Special Interest Politics1," Comparative Economic Studies, Palgrave Macmillan, vol. 46(3), pages 400-422, September.
  5. Ashoka Mody & Diego Saravia, 2006. "Catalysing Private Capital Flows: Do IMF Programmes Work as Commitment Devices?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 116(513), pages 843-867, 07.
  6. Dollar, David & Svensson, Jakob, 2000. "What Explains the Success or Failure of Structural Adjustment Programmes?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(466), pages 894-917, October.
  7. Michael Mussa & Miguel Savastano, 2000. "The IMF Approach to Economic Stabilization," NBER Chapters, in: NBER Macroeconomics Annual 1999, Volume 14, pages 79-128 National Bureau of Economic Research, Inc.
  8. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers, Princeton, Woodrow Wilson School - Public and International Affairs 162, Princeton, Woodrow Wilson School - Public and International Affairs.
  9. Graham Bird, 2006. "The Implementation of IMF Programs: A Conceptual Framework," School of Economics Discussion Papers, School of Economics, University of Surrey 1506, School of Economics, University of Surrey.
  10. Joseph P. Joyce, 2006. "Promises Made, Promises Broken: A Model Of Imf Program Implementation," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 18(3), pages 339-365, November.
  11. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May.
  12. Edwards, Sebastian, 1989. "The international monetary fund and the developing countries: A critical evaluation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 31(1), pages 7-68, January.
  13. Conway, Patrick, 1994. "IMF lending programs: Participation and impact," Journal of Development Economics, Elsevier, vol. 45(2), pages 365-391, December.
  14. Jacques J. Polak, 1991. "The Changing Nature of IMF Conditionality," OECD Development Centre Working Papers 41, OECD Publishing.
  15. Haggard, Stephan, 1985. "The politics of adjustment: lessons from the IMF's Extended Fund Facility," International Organization, Cambridge University Press, Cambridge University Press, vol. 39(03), pages 505-534, June.
  16. Polak, J.J., 1991. "The Changing Nature of IMF Conditionality," Princeton Studies in International Economics, International Economics Section, Departement of Economics Princeton University, 184, International Economics Section, Departement of Economics Princeton University,.
  17. Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
  18. Bird, Graham, 1996. "Borrowing from the IMF: The policy implications of recent empirical research," World Development, Elsevier, Elsevier, vol. 24(11), pages 1753-1760, November.
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Citations

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Cited by:
  1. Ozlem Arpac & Graham Bird, 2009. "Turkey and the IMF: A case study in the political economy of policy implementation," The Review of International Organizations, Springer, Springer, vol. 4(2), pages 135-157, June.
  2. Hannes Öhler & Peter Nunnenkamp & Axel Dreher, 2011. "Does Conditionality Work? A Test for an Innovative US Aid Scheme," CESifo Working Paper Series 3454, CESifo Group Munich.
  3. Doris A. Oberdabernig, 2012. "Revisiting the Effects of IMF Programs on Poverty and Inequality," Department of Economics Working Papers wuwp144, Vienna University of Economics, Department of Economics.
  4. Javed, Omer, 2013. "Determinants of Institutional Quality: A Case Study of IMF Programme Countries," MPRA Paper 51344, University Library of Munich, Germany.
  5. Csaba, László, 2011. "A magyar átalakulás és fejlődés néhány általánosítható elméleti tanulsága
    [Some generalizable theoretical lessons of the Hungarian transformation and development]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 813-831.
  6. Öhler, Hannes & Nunnenkamp, Peter & Dreher, Axel, 2010. "Does conditionality work? A test for an innovative US aid scheme," Center for European, Governance and Economic Development Research Discussion Papers 103, University of Goettingen, Department of Economics.
  7. Javed, Omer, 2014. "Institutional quality, macroeconomic stabilization and economic growth: a case study of IMF programme countries," MPRA Paper 56370, University Library of Munich, Germany.
  8. Molly Bauer & Cesi Cruz & Benjamin Graham, 2012. "Democracies only: When do IMF agreements serve as a seal of approval?," The Review of International Organizations, Springer, Springer, vol. 7(1), pages 33-58, March.

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