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Macro performance under adjustment lending

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Author Info

  • Faini, Riccardo
  • De Melo, Jaime
  • Senhadji-Semlali, Abdel
  • Stanton, Julie

Abstract

The authors of this paper use simple statistical methods to measure the effect of adjustment lending (AL) on economic performance. Using eight economic indicators, they rely on traditional"before-after"comparisons of AL recipients and a control group of 62 countries. How have countries under adjustment lending performed? AL countries improved their external position, generating enough of a trade balance surplus to service their external debt. Fiscal indicatorsdeteriorated, however, a sign that macroeconomic imbalances remained. Finally, growth rates fell, reflecting deteriorating terms of trade and the difficulties of reducing absorption to the required degree. On nine economic indicators, AL recipients fared better overall than the non recipients - though the improvement varied between 53 and 33 percent, depending on the classification. Some improvements were mild, some statistically insignificant. Improvements are stronger for a group of 12 AL recipients that received 3 or more adjustment loans.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 190.

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Date of creation: 30 Apr 1989
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Handle: RePEc:wbk:wbrwps:190

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Related research

Keywords: Economic Theory&Research; Country Strategy&Performance; International Terrorism&Counterterrorism; Environmental Economics&Policies; Banks&Banking Reform;

References

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  1. Rudiger Dornbusch, 1985. "Policy and Performance Links between LDC Debtors and Industrial Nations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 303-368.
  2. Jeffrey Sachs & Harry Huizinga, 1987. "U.S. Commercial Banks and the Developing Country Debt Crisis," NBER Working Papers 2455, National Bureau of Economic Research, Inc.
  3. Cline, William R, 1985. "International Debt: From Crisis to Recovery?," American Economic Review, American Economic Association, vol. 75(2), pages 185-90, May.
  4. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
  5. Fran├žois Bourguignon & William H. Branson & Jaime de Melo, 1989. "Macroeconomic Adjustment and Income Distribution: A Macro-Micro Simulation Model," OECD Development Centre Working Papers 1, OECD Publishing.
  6. Balassa, Bela, 1988. "Quantitative appraisal of adjustment lending," Policy Research Working Paper Series 79, The World Bank.
  7. Dani Rodrik, 1988. "The Welfare Economics of Debt Service," NBER Working Papers 2655, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Ratha, Dilip, 2001. "Complementarity between multilateral lending and private flows to developing countries : some empirical results," Policy Research Working Paper Series 2746, The World Bank.
  2. Wasseem Mina & Jorge Martinez-Vazquez, 2002. "IMF Lending, Maturity of International Debt and Moral Hazard," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0301, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Mozammel Huq & Michael Tribe, 2004. "Economic development in a changing globalized economy," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 911-923.
  4. Frankel, Jeffrey & Roubini, Nouriel, 2002. "The Role of Industrial Country Policies in Emerging Market Crises," Working Paper Series rwp02-002, Harvard University, John F. Kennedy School of Government.
  5. Graham Bird & Dane Rowlands, 2000. "The catalyzing role of policy-based lending by the IMF and the World Bank: fact or fiction?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 951-973.
  6. Axel Dreher & Roland Vaubel, 2002. "Does the IMF cause moral hazard and political business cycles? Evidence from panel data," International Finance 0207002, EconWPA.

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