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© 2006 International Monetary Fund
Production: IMF Multimedia Services Division
Interior Design: Alicia Etchebarne-Bourdin
Cover Design: Martine Rossignol-Winner
Cataloging-in-Publication Data
[IMF-supported programs: recent staff research/edited by Ashoka Mody and Alessandro Rebucci]—Washington, D.C.: International Monetary Fund, 2006]
p. cm.
Includes bibliographical references
ISBN 9781589063617
1. International Monetary Fund—Research. I. Mody, Ashoka. II. Rebucci, Alessandro. III. International Monetary Fund.
HG3881.5.I58I5 2006
The following symbols have been used throughout this paper:
… to indicate that data are not available;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (e.g., 1997–98 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1997/98) to indicate a fiscal (financial) year.
“n.a.” means not applicable.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The views expressed in this publication are those of the authors and do not necessarily represent the views of the International Monetary Fund. The term “country,” as used in this publication, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
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Contents
Foreword
Contributors
Overview
Part I. Design
1 Programs Objectives and Program Success
Atish Ghosh, Timothy Lane, Alun Thomas, and Juan Zalduendo
2 IMF Programs and Growth: Is Optimism Defensible?
Reza Baqir, Rodney Ramcharan, and Ratna Sahay
3 Do IMF-Supported Programs Boost Private Capital Inflows?
The Role of Program Size and Policy Adjustment
Roberto Benelli
4 Macroeconomic Adjustment in IMF-Supported Programs: Projections and Reality
Ruben Atoyan, Patrick Conway, Marcelo Selowsky, and Tsidi Tsikata
5 Fiscal Policy, Expenditure Composition, and Growth in Low-Income Countries
Sanjeev Gupta, Benedict Clements, Emanuele Baldacci, and Carlos Mulas-Granados
Part II. Implementation
6 Efficiency and Legitimacy: Trade-Offs in IMF Governance
Carlo Cottarelli
7 IMF Conditionality and Country Ownership of Adjustment Programs
Mohsin S. Khan and Sunil Sharma
8 Different Strokes? Common and Uncommon Responses to Financial Crises
James M. Boughton
9 Institutions, Program Implementation, and Macroeconomic Performance
Saleh M. Nsouli, Ruben Atoyan, and Alex Mourmouras
10 What Determines the Implementation of IMF-Supported Programs?
Anna Ivanova, Wolfgang Mayer, Alex Mourmouras, and George Anayiotos
Part III. Effectiveness
11 International Bailouts, Moral Hazard, and Conditionality
Olivier Jeanne and Jeromin Zettelmeyer
12 Bedfellows, Hostages, or Perfect Strangers? Global Capital Markets and the Catalytic Effect of IMF Crisis Lending
Carlo Cottarelli and Curzio Giannini
13 Keeping Capital Flowing: The Role of the IMF
Michael Bordo, Ashoka Mody, and Nienke Oomes
14 Long-Term Fiscal Developments and IMF Conditionality: Is There a Link?
Aleš Bulíř and Soojin Moon
15 Evaluating IMF-Supported Programs in the 1990s: The Importance of Taking Explicit Account of Stoppages
Chuling Chen and Alun Thomas
Foreword
A long tradition of research has sought to evaluate the effectiveness of IMF-supported programs. The IMF itself has devoted much institutional energy to assessing its performance, both to learn from the past and to deal with new challenges. In doing so, the staff of the IMF has contributed significantly to analyzing the IMF’s ability to achieve its stated goals of fostering external viability and growth. IMF staff members have had the advantage of access to program details often not as easily available to external researchers. Staff contributions have also included methodological advances. Importantly, in conducting this research, we have not shied away from unpleasant conclusions.
This volume includes recent research that moves decisively beyond the typical characterization of programs. Though researchers have sometimes made the basic distinctions between the different types of IMF program—Stand-By Arrangements, and arrangements under the Extended Fund Facility and the Poverty Reduction and Growth Facility (as well as their predecessor facilities)—the nuances of programs are more extensive. In particular, the circumstances under which the program is designed, the limitations in program implementation, and the specific national and international economic conditions when the program is in effect all influence the ultimate outcome. The key achievement of the research reported here is to deal with this complexity while also providing simple insights. Of course, all research is work in progress, and these insights need to be verified by further work, but they do offer useful working hypotheses for our operations.
Looking ahead, I see two obvious areas for further work. First, as the essays in this volume demonstrate, the IMF’s advice and financing are conditioned by a variety of political economy considerations. International political economy has a bearing on program selection, conditionality, and implementation. Similarly, domestic political economy shapes attitudes toward the IMF and, hence, the ability of the authorities to enter into constructive IMF-supported programs. A richer political economy analysis could make for more effective engagement.
Second, the IMF’s governance structure also has implications for program design and implementation, and, hence, for the IMF’s economic effectiveness. Though, once again, the task is a difficult one, careful analysis could provide useful input to the ongoing debates.
Raghuram G. Rajan
Economic Counsellor and Director, Research Department
International Monetary Fund
Contributors1
| George Anayiotos | Senior Economist, Finance Department |
| Ruben Atoyan | Economist, Western Hemisphere Department |
| Emanuele Baldacci | Lead Researcher, Italian Statistical Office (ISTAT) |
| Reza Baqir | Resident Representative, Philippines |
| Roberto Benelli | Economist, Western Hemisphere Department |
| Michael Bordo | Professor of Economics, Rutgers University |
| James M. Boughton | IMF Historian |
| Aleš Bulíř | Senior Economist, Policy Development and Review Department |
| Chuling Chen | Analyst, Modeling and Research Department, (U.S.) Federal Home Loan Mortgage Corporation |
| Benedict Clements | Advisor, Western Hemisphere Department |
| Patrick Conway | Professor of Economics, University of North Carolin at Chapel Hill |
| Carlo Cottarelli | Deputy Director, Policy Development and Review Department |
| Atish Ghosh | Division Chief, Policy Development and Review Department |
| Curzio Giannini2 | Deputy Head, International Relations Department, Banca d’Italia |
| Sanjeev Gupta | Assistant Director, African Department |
| Anna Ivanova | Economist, Fiscal Affairs Department |
| Olivier Jeanne | Deputy Division Chief, Research Department |
| Mohsin S. Khan | Director, Middle East and Central Asia Department |
| Timothy Lane | Assistant Director, Western Hemisphere Department |
| Wolfgang Mayer | Professor of Economics, University of Cincinnati |
| Ashoka Mody | Assistant Director, European Department |
| Soojin Moon | Candidate Member, American Institute of Certified Public Accountants (AICPA) |
| Alex Mourmouras | Deputy Division Chief, IMF Institute |
| Carlos Mulas-Granados | Vice-Chairman, Prime Minister’s Economic Bureau (Madrid) |
| Saleh M. Nsouli | Director, IMF Offices in Europe |
| Nienke Oomes | Economist, European Department |
| Rodney Ramcharan | Economist, Research Department |
| Alessandro Rebucci | Economist, Research Department |
| Ratna Sahay | Assistant Director, Western Hemisphere Department |
| Marcelo Selowsky | Assistant Director, Independent Evaluation Office |
| Sunil Sharma | Director, IMF-Singapore Regional Training Institute |
| Alun Thomas | Senior Economist, Policy Development and Review Department |
| Tsidi Tsikata | Deputy Division Chief, African Department |
| Juan Zalduendo | Senior Economist, Policy Development and Review Department |
| Jeromin Zettelmeyer | Assistant to the Director, Western Hemisphere Department |
| George Anayiotos | Senior Economist, Finance Department |
| Ruben Atoyan | Economist, Western Hemisphere Department |
| Emanuele Baldacci | Lead Researcher, Italian Statistical Office (ISTAT) |
| Reza Baqir | Resident Representative, Philippines |
| Roberto Benelli | Economist, Western Hemisphere Department |
| Michael Bordo | Professor of Economics, Rutgers University |
| James M. Boughton | IMF Historian |
| Aleš Bulíř | Senior Economist, Policy Development and Review Department |
| Chuling Chen | Analyst, Modeling and Research Department, (U.S.) Federal Home Loan Mortgage Corporation |
| Benedict Clements | Advisor, Western Hemisphere Department |
| Patrick Conway | Professor of Economics, University of North Carolin at Chapel Hill |
| Carlo Cottarelli | Deputy Director, Policy Development and Review Department |
| Atish Ghosh | Division Chief, Policy Development and Review Department |
| Curzio Giannini2 | Deputy Head, International Relations Department, Banca d’Italia |
| Sanjeev Gupta | Assistant Director, African Department |
| Anna Ivanova | Economist, Fiscal Affairs Department |
| Olivier Jeanne | Deputy Division Chief, Research Department |
| Mohsin S. Khan | Director, Middle East and Central Asia Department |
| Timothy Lane | Assistant Director, Western Hemisphere Department |
| Wolfgang Mayer | Professor of Economics, University of Cincinnati |
| Ashoka Mody | Assistant Director, European Department |
| Soojin Moon | Candidate Member, American Institute of Certified Public Accountants (AICPA) |
| Alex Mourmouras | Deputy Division Chief, IMF Institute |
| Carlos Mulas-Granados | Vice-Chairman, Prime Minister’s Economic Bureau (Madrid) |
| Saleh M. Nsouli | Director, IMF Offices in Europe |
| Nienke Oomes | Economist, European Department |
| Rodney Ramcharan | Economist, Research Department |
| Alessandro Rebucci | Economist, Research Department |
| Ratna Sahay | Assistant Director, Western Hemisphere Department |
| Marcelo Selowsky | Assistant Director, Independent Evaluation Office |
| Sunil Sharma | Director, IMF-Singapore Regional Training Institute |
| Alun Thomas | Senior Economist, Policy Development and Review Department |
| Tsidi Tsikata | Deputy Division Chief, African Department |
| Juan Zalduendo | Senior Economist, Policy Development and Review Department |
| Jeromin Zettelmeyer | Assistant to the Director, Western Hemisphere Department |