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IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality

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  • Axel Dreher

    (ETH Zürich)

Abstract

In theory, the IMF could influence economic growth via several channels, among them advice to policy makers, money disbursed under its programs, and its conditionality. This paper tries to separate those effects empirically. Using panel data for 98 countries over the period 1970-2000 it analyzes whether IMF involvement influences economic growth in program countries. Consistent with the results of previous studies, it is shown that IMF programs reduce growth rates when their endogeneity is accounted for. There is also evidence that compliance with conditionality mitigates this negative effect, while the overall impact, however, remains negative. IMF loans have no robust statistically significant impact.

Suggested Citation

  • Axel Dreher, 2004. "IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality," International Finance 0404004, University Library of Munich, Germany, revised 13 Aug 2005.
    • Handle: RePEc:wpa:wuwpif:0404004
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    Keywords

    IMF programs; growth; compliance; conditionality;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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