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The Episodic and Unpredictable Nature of IMF Lending: An Empirical Analysis

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  • Graham Bird
  • Dane Rowlands

Abstract

Abstract Having had excess lending capacity at the beginning of 2008, by the end of the year International Monetary Fund (IMF) lending had increased and, in anticipation of a further increase in the demand for Fund assistance, arguments were being put forward for a substantial increase in IMF resources. Analysis of IMF lending over a protracted period of time reveals considerable volatility. Using both bivariate and multiple regression estimation, this paper investigates the determinants of IMF lending and examines the extent to which it is predictable. Although some significant relationships are discovered, many of them are unstable and time variant. This makes it difficult to predict IMF lending with any degree of confidence. The paper goes on to examine briefly the policy implications of unpredictability. It is critical of the ways in which the problem has been handled in the past and it offers what it argues is a preferable solution. Copyright 2010 Blackwell Publishing Ltd.

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  • Graham Bird & Dane Rowlands, 2010. "The Episodic and Unpredictable Nature of IMF Lending: An Empirical Analysis," The World Economy, Wiley Blackwell, vol. 33(10), pages 1280-1301, October.
  • Handle: RePEc:bla:worlde:v:33:y:2010:i:10:p:1280-1301
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    References listed on IDEAS

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    1. Martin Steinwand & Randall Stone, 2008. "The International Monetary Fund: A review of the recent evidence," The Review of International Organizations, Springer, vol. 3(2), pages 123-149, June.
    2. 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, vol. 4(3), pages 243-270.
    3. Atish R. Ghosh & Juan Zalduendo & Manuela Goretti & Bikas Joshi & Alun H. Thomas, 2007. "Modeling Aggregate Use of Fund Resources—Analytical Approaches and Medium-Term Projections," IMF Working Papers 07/70, International Monetary Fund.
    4. Graham Bird & Dane Rowlands, 2002. "The Pattern of IMF Lending: An Analysis of Prediction Failures," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(3), pages 173-186.
    5. Graham Bird & Dane Rowlands, 2009. "A disaggregated empirical analysis of the determinants of IMF arrangements: Does one model fit all?," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(7), pages 915-931.
    6. Graham Bird & Dane Rowlands, 2001. "Catalysis or Direct Borrowing: The Role of the IMF in Mobilising Private Capital," The World Economy, Wiley Blackwell, vol. 24(1), pages 81-98, January.
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