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An Assessment of the Effectiveness of International Financial Intervention

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  • James L. Butkiewicz

    ()
    (Department of Economics, University of Delaware)

  • Halit Yanikkaya

    ()
    (Department of Economics, Celal Bayar University)

Abstract

The two global international financial institutions, the International Monetary Fund and the World Bank, frequently, and often repeatedly, extend loans to developing nations. Recently, these loans have been blamed for generating adverse economic outcomes. An empirical growth model, which controls for the other determinants of growth, is used to assess the growth impact of Fund and Bank loan programs. The primary focus is on the heavily criticized IMF lending programs. Another unique feature of this study is the use of the value of lending programs rather that the number of programs. The estimates indicate that Bank lending stimulates growth in some cases, primarily by increasing public investment. Fund lending is either neutral or detrimental to growth. The channel for this effect is a negative impact of Fund lending on private investment.

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File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2003/UDWP2003-05.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 03-05.

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Length: 42 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:dlw:wpaper:03-05

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Postal: Purnell Hall, Newark, Delaware 19716
Phone: (302) 831-2565
Fax: (302) 831-6968
Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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Related research

Keywords: International lending; development aid; empirical growth model;

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References

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  1. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, December.
  2. Conway, Patrick, 1994. "IMF lending programs: Participation and impact," Journal of Development Economics, Elsevier, vol. 45(2), pages 365-391, December.
  3. Michael Hutchison, 2003. "A Cure Worse Than the Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 321-360 National Bureau of Economic Research, Inc.
  4. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
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  8. Bordo, Michael D. & Schwartz, Anna J., 2000. "Measuring real economic effects of bailouts: historical perspectives on how countries in financial distress have fared with and without bailouts," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 53(1), pages 81-167, December.
  9. Anna Unigovskaya & Valerie Mercer-Blackman, 2000. "Compliance with IMF Program Indicators and Growth in Transition Economies," IMF Working Papers 00/47, International Monetary Fund.
  10. Knight, Malcolm & Santaella, Julio A., 1997. "Economic determinants of IMF financial arrangements," Journal of Development Economics, Elsevier, vol. 54(2), pages 405-436, December.
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  13. Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 495-526, April.
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  17. Barro, Robert J. & Lee, Jong-Wha, 2005. "IMF programs: Who is chosen and what are the effects?," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1245-1269, October.
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  19. International Monetary Fund, 1998. "Do IMF-Supported Programs Work? a Survey of the Cross-Country Empirical Evidence," IMF Working Papers 98/169, International Monetary Fund.
  20. Dane Rowlands, 1996. "New Lending to Less Developed Countries: The Effect of the IMF," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 443-47, April.
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  25. Feinberg, Richard E., 1988. "The changing relationship between the World Bank and the International Monetary Fund," International Organization, Cambridge University Press, vol. 42(03), pages 545-560, June.
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