Chapter 2 IMF Programs and Growth: Is Optimism Defensible?
Author:
Reza Baqir https://isni.org/isni/0000000404811396 International Monetary Fund

Search for other papers by Reza Baqir in
Current site
Google Scholar Close
Language:
English
Print Publication Date:
03 Apr 2006
Keywords:
SEM; IMF program; country; IMF-supported program; program implementation; IMF effort; current account ratio; Current account; Capital flows; Private capital flows; Fiscal stance; Global; Sub-Saharan Africa; East Asia; Africa; Europe; high-profile SBA; IMF's article; IMF loan disbursement; inflation objective; IMF's staff; Inflation; Current account balance

Abstract

IMF-supported programs focus on key objectives (such as growth, inflation, and the external current account) and on intermediate policy targets (such as monetary and fiscal policies) needed to achieve these objectives. In this paper, we use a new, large dataset, with information on 94 programs between 1989 and 2002, to compare programmed objectives and policy targets to actual outcomes. We report two broad sets of results. First, we find that outcomes typically fell short of expectations on growth and inflation but were broadly in line with the programmed external current account objectives. Similarly, programmed intermediate policy targets were generally more ambitious than the policy outcomes. Second, and focusing on growth, we examine the relationship between objectives and policy targets, and find differences in the way ambitious monetary and fiscal targets affected the achievement of the growth objective. On the one hand, more ambitious fiscal targets, even when they were missed, led to better growth performance. On the other hand, more ambitious monetary targets tended to be associated with lower growth performance.

Other IMF Content

Other Publishers Content

  • Collapse
  • Expand
Cover IMF-Supported Programs
IMF-Supported Programs
Recent Staff Research
ISBN:
9781589063617
Publication Date:
03 Apr 2006
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063617.072
Pages:
292

  • Bagci, P., and W. Perraudin, 1997, “Do IMF Programs Work?” Global Economic Institutions Working Paper.

  • Baqir, R., R. Ramcharan, and R. Sahay, 2003, “IMF Program Design” (unpublished: Washington: International Monetary Fund).

  • Barro, Robert J., and Jong-Wha Lee, 2002, “IMF Programs: Who Is Chosen and What Are the Effects?” NBER Working Paper No. 8951 (Cambridge, Massachusetts: National Bureau of Economic Research), pp. 1–37.

    • Search Google Scholar
    • Export Citation

  • Bird, Graham, 2002, “The Credibility and Signaling of IMF Programs,” Journal of Policy Modelling, Vol. 24, pp. 799–811.

  • Bulíř, A., and S. Moon, 2004, “Is Fiscal Adjustment More Durable When the IMF Is Involved?” Comparative Economic Studies, Vol. 46, pp. 373–99. This paper also appears, in somewhat different form, as Chapter 14 in this volume.

    • Search Google Scholar
    • Export Citation

  • Conway, P., 1994, “IMF Lending Programs: Participation and Impact,” Journal of Development Economics, Vol. 45 (December), pp. 365–91.

    • Search Google Scholar
    • Export Citation

  • Dicks-Mireaux, Louis, Mauro Mecagni, and Susan Schadler, 2000, “Evaluating the Effect of IMF Lending to Low Income Countries,” Journal of Development Economics, Vol. 61 (April), pp. 495–525.

    • Search Google Scholar
    • Export Citation

  • Ghosh, A., T. Lane, M. Schulze-Ghattas, A. Bulíř, J. Hamann, and A. Mourmouras, 2002, IMF-Supported Programs in Capital Account Crises, IMF Occasional Paper No. 210 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Goldstein, Morris, and P. Montiel, 1996, “Evaluating Fund Stabilization Programs with Multicountry Data: Some Methodological Pitfalls,” Staff Papers, International Monetary Fund, Vol. 33 (June), pp. 304–44.

    • Search Google Scholar
    • Export Citation

  • Haque, Nadeem Ul, and Mohsin S. Khan, 1998, “Do IMF-Supported Programs Work? A Survey of Cross-Country Empirical Evidence,” IMF Working Paper 98/169 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Helbling, Thomas, Ashoka Mody, and Ratna Sahay, 2004, “Debt Accumulation in the CIS-7 Countries: Bad Luck, Bad Policies, or Bad Advice?” in The Low-Income Countries of the Commonwealth of Independent States: Progress and Challenges in Transition, ed. by Clinton R. Shiells and Sarosh Sattar (Washington: International Monetary Fund and World Bank).

    • Search Google Scholar
    • Export Citation

  • Kaminsky, Graciela L., Carmen M. Reinhart, and Carlos A. Végh, 2004, “When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies,” in NBER Macroeconomic Annual, ed. by Kenneth Rogoff and Mark Gertler (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation

  • Khan, Mohsin S., 1990, “The Macroeconomic Effects of IMF-Supported Adjustment Programs,” Staff Papers, International Monetary Fund, Vol. 37 (June), pp. 195–231.

    • Search Google Scholar
    • Export Citation

  • Khan, Mohsin S., and M. Knight, 1981, “Stabilization Programs in Developing Countries: A Formal Framework,” Staff Papers, International Monetary Fund, Vol. 28 (March), pp. 1–53.

    • Search Google Scholar
    • Export Citation

  • Khan, Mohsin S., and M. Knight, 1985, IMF-Supported Programs and Economic Growth, IMF Occasional Paper No. 41 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Killick, T., M. Malik, and M. Manuel, 1995, “What Can We Know About the Effects of IMF Programmes?” World Economy, Vol. 15 (September), pp. 575–97.

    • Search Google Scholar
    • Export Citation

  • Mussa, Michael, and Miguel Savastano, 1999, “The IMF Approach to Economic Stabilization,” IMF Working Paper 99/104 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Musso, Alberto, and Steven Phillips, 2002, “Comparing Projections and Outcomes of IMF-Supported Programs.” Staff Papers, International Monetary Fund, Vol. 49, No. 1, pp. 22–48.

    • Search Google Scholar
    • Export Citation

  • Przeworski, Adam, and J.R. Vreeland, 2000, “The Effect of IMF Programs on Economic Growth,” Journal of Development Economics, Vol. 62, pp. 385–421.

    • Search Google Scholar
    • Export Citation

  • Reichmann, T., and R. Stillson, 1978, “Experience with Programs of Balance Payments Adjustment: Stand-By Arrangements in the Higher Credit Tranches, 1963–1972,” Staff Papers, International Monetary Fund, Vol. 25 (June), pp. 119–39.

    • Search Google Scholar
    • Export Citation

  • Santaella, J., 1995, “Four Decades of Fund Arrangements: Macroeconomics Stylized Facts Before the Adjustment Programs,” IMF Working Paper 95/74 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Stiglitz, J., 2002, Globalization and Its Discontents (New York: Norton).