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Cooperation between European Governments and the IMF: Conditionality Impact on Employment within the EU

Listed author(s):
  • Armenia ANDRONICEANU

    (The Bucharest University of Economic Studies, Romania)

  • Gurgen OHANYAN

    ()

    (The Bucharest University of Economic Studies, Romania)

Registered author(s):

    Conditional lending by the International Monetary Fund (IMF) is a main anxiety causing issue when national governments turnelsewhere for financial assistance. As it is wellknown, the IMF’s austerity measures have had negative effects on some social and economic aspects. At the same time, one of the most important social issues is assumed to be job security, given that the employment rate has a notable influence both on GDP and on local market competitiveness. Hence, this paper aims to identify the relevant impact of and aspects related to the IMF measures proposed to the EU Member-States and their sway on the employment rate. The cross-country fixed effects panel data estimation approach has been employed to assess the effects of attached conditionality on employment between 2001 and 2012. In addition, the research process investigates the IMF program’s sway on youth employment. The findings are based on about 200 observations and argue that participation in IMF programs has increased economic growth both on total and youth employment; however, budget deficit sway on youth employment was more noticeable in nonprogram countries. The research results are robust enough and may be useful for both EU governments and the representatives of the IMF, as they highlight the effectiveness of conditional lending specificallyon employment in observed states.

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    File URL: http://rmci.ase.ro/no16vol3/03.pdf
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    Article provided by Faculty of Management, Academy of Economic Studies, Bucharest, Romania in its journal REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT.

    Volume (Year): 16 (2015)
    Issue (Month): 3 (July)
    Pages: 324-334

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    Handle: RePEc:rom:rmcimn:v:16:y:2015:i:3:p:324-334
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    1. Allan Drazen, 2002. "Conditionality and Ownership in IMF Lending: A Political Economy Approach," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 36-67.
    2. Axel Dreher, 2009. "IMF conditionality: theory and evidence," Public Choice, Springer, vol. 141(1), pages 233-267, October.
    3. Raymond Vreeland, James, 2002. "The Effect of IMF Programs on Labor," World Development, Elsevier, vol. 30(1), pages 121-139, January.
    4. Joseph E. Stiglitz, 2004. "Capital-market Liberalization, Globalization, and the IMF," Oxford Review of Economic Policy, Oxford University Press, vol. 20(1), pages 57-71, Spring.
    5. Polak, J.J., 1991. "The Changing Nature of IMF Conditionality," Princeton Studies in International Economics 184, International Economics Section, Departement of Economics Princeton University,.
    6. Jacques J. Polak, 1991. "The Changing Nature of IMF Conditionality," OECD Development Centre Working Papers 41, OECD Publishing.
    7. Dreher, Axel, 2006. "IMF and economic growth: The effects of programs, loans, and compliance with conditionality," World Development, Elsevier, vol. 34(5), pages 769-788, May.
    8. Drazen, Allan, 2002. "Conditionality and Ownership in IMF Lending: A Political Economy Approach," CEPR Discussion Papers 3562, C.E.P.R. Discussion Papers.
    9. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
    10. Armenia Androniceanu & Irina-Virginia Drăgulănescu, 2012. "Sustainability of the Organizational Changes in the Context of Global Economic Crisis," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(32), pages 365-379, June.
    11. Haggard, Stephan, 1985. "The politics of adjustment: lessons from the IMF's Extended Fund Facility," International Organization, Cambridge University Press, vol. 39(03), pages 505-534, June.
    12. Peter Isard & Allan Drazen, 2004. "Can Public Discussion Enhance Program Ownership?," IMF Working Papers 04/163, International Monetary Fund.
    13. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
    14. Graham Bird, 2001. "IMF Programmes: Is there a conditionality Laffer Curve?," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(2), pages 29-49, April.
    15. Allan Drazen & Peter Isard, 2004. "Can Public Discussion Enhance Program Ownership?," NBER Working Papers 10927, National Bureau of Economic Research, Inc.
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