Does the IMF Influence Fiscal and Monetary Policy?
In theory, the IMF could influence fiscal and monetary policy via several channels, among them advice to policy makers, conditionality, and the moral hazard it induces with the borrowers. This article tries to disentangle those effects empirically. Using panel data for 98 countries over the period 1975-2000 it analyzes whether IMF involvement indeed influences fiscal and monetary policy in program countries. There is evidence that participation in IMF Standby and Extended Fund Facility arrangements improves economic policy. Money disbursed and the degree to which a program is implemented does not have any systematic influence. The same is true for future availability of resources as measured by exhaustion of a country's quota with the Fund. The final section discusses policy implications.
Volume (Year): 8 (2005)
Issue (Month): 3 ()
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- Michele FRATIANNI & John PATTISON, 2007.
"Who Is Runninc the IMF: Critical Shareholders or the Staff?,"
279, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
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0309004, EconWPA, revised 17 Oct 2003.
- 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.
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"What Explains the Success or Failure of Structural Adjustment Programmes?,"
Royal Economic Society, vol. 110(466), pages 894-917, October.
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- Axel Dreher & Roland Vaubel, 2004. "Do IMF and IBRD Cause Moral Hazard and Political Business Cycles? Evidence from Panel Data," Open Economies Review, Springer, vol. 15(1), pages 5-22, January.
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