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Over-optimism and the IMF

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  • Graham Bird

    (University of Surrey)

Abstract

One way of assessing the impact of IMF programmes is to see whether performance and policy targets are achieved. However, does a failure to hit targets mean that the programmes have been unsuccessful, or could it be that targets have been too ambitious? This paper analyses political economy factors impinging on governments and on the IMF that may lead to serial over-optimism. It goes on to examine the empirical evidence that is consistent with over-optimism. Having considered whether over-optimism is a cause for concern, and concluded that it is, the paper considers reforms that would allow realism to replace it. By eliminating over-optimism it is argued that the psychology of failure surrounding IMF programmes could be significantly reduced or even broken. Copyright Blackwell Publishing Ltd 2005.
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  • Graham Bird, 2005. "Over-optimism and the IMF," School of Economics Discussion Papers 0505, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:0505
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    File URL: https://repec.som.surrey.ac.uk/2005/DP05-05.pdf
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    References listed on IDEAS

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    1. Conway, Patrick, 1994. "IMF lending programs: Participation and impact," Journal of Development Economics, Elsevier, vol. 45(2), pages 365-391, December.
    2. William Easterly, 2002. "The cartel of good intentions: The problem of bureaucracy in foreign aid," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(4), pages 223-250.
    3. Edwards, Sebastian, 1989. "The international monetary fund and the developing countries: A critical evaluation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 31(1), pages 7-68, January.
    4. Alberto Musso & Steven Phillips, 2002. "Comparing Projections and Outcomes of IMF-Supported Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(1), pages 1-3.
    5. Tony Killick & Moazzam Malik & Marcus Manuel, 1992. "What Can We Know About the Effects of IMF Programmes?," The World Economy, Wiley Blackwell, vol. 15(5), pages 575-598, September.
    6. Ramkishen Rajan & Graham Bird, 2001. "Economic Globalisation," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(3), pages 1-18, July.
    7. 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.
    8. 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.
    9. 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.
    10. Graham Bird, 2008. "The implementation of IMF programs: A conceptual framework," The Review of International Organizations, Springer, vol. 3(1), pages 41-64, March.
    11. Graham Bird, 2002. "The Completion Rate of IMF Programmes: What We Know, Don't Know and Need to Know," The World Economy, Wiley Blackwell, vol. 25(6), pages 833-847, June.
    12. Ales Bulir & Marianne Schulze-Gattas & Atish R. Ghosh & Alex Mourmouras & A. Javier Hamann & Timothy D. Lane, 2002. "IMF-Supported Programs in Capital Account Crises; Design and Experience," IMF Occasional Papers 210, International Monetary Fund.
    13. Evrensel, Ayse Y., 2002. "Effectiveness of IMF-supported stabilization programs in developing countries," Journal of International Money and Finance, Elsevier, vol. 21(5), pages 565-587, October.
    14. Harold Bierman, 2001. "Bad Market Days," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(3), pages 177-191, July.
    15. Reza Baqir & Rodney Ramcharan & Ratna Sahay, 2005. "IMF Programs and Growth: Is Optimism Defensible?," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 260-286, September.
    16. Graham Bird, 2003. "The Implementation of IMF Programmes: A Conceptual Framework and a Policy Agenda," School of Economics Discussion Papers 1003, School of Economics, University of Surrey.
    17. Graham Bird & Thomas D Willett, 2004. "IMF Conditionality, Implementation and the New Political Economy of Ownership," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(3), pages 423-450, September.
    18. Mohsin S. Khan, 1990. "The Macroeconomic Effects of Fund-Supported Adjustment Programs," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 195-231, June.
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    Cited by:

    1. ., 2016. "Introduction and overview: the purposes and operations of the IMF," Chapters,in: The International Monetary Fund, chapter 1, pages 1-18 Edward Elgar Publishing.
    2. Olaf Hübler & Lukas Menkhoff & Chodechai Suwanaporn, 2008. "Financial Liberalisation in Emerging Markets: How Does Bank Lending Change?," The World Economy, Wiley Blackwell, vol. 31(3), pages 393-415, March.
    3. Bessma Momani, 2007. "IMF staff: Missing link in fund reform proposals," The Review of International Organizations, Springer, vol. 2(1), pages 39-57, March.

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