Alessandro Rebucci, and Ashoka Mody
Published Date:
April 2006
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Ashoka Mody and Alessandro Rebucci1

IMF lending programs, though varying in objectives and duration, are often associated with a sharp and sustained redirection of the course of economic policy. An IMF-supported program is typically initiated when a country faces the need for external adjustment. The IMF provides financing and the country puts in place a program of policies to redress actual or potential external imbalances; also, where appropriate, economic reforms to raise long-term growth are introduced or accelerated. Continued lending is predicated on progress in implementing the program, which in turn is assessed on the basis of preset conditions (performance criteria) to be met by specified dates in the context of periodic reviews.

Does the policy redirection supported by IMF lending achieve its goals? The effectiveness of program lending in achieving its goals has long been the subject of research. The evaluation is amenable to analyses that assess the variations in economic indicators before and after the start of a program.2 And although even sophisticated before-and-after analyses have their pitfalls, researchers have continued to exercise their ingenuity to identify, or isolate, the effects of an IMF program.3

The IMF’s own staff has been active in—and, often, at the forefront of—assessing the effectiveness of program lending. This book describes the recent evolution of staff research on program lending, highlighting both methodological contributions and substantive findings. In the mid- and late 1980s, the overarching question posed was whether an IMF-supported program helped improve macroeconomic performance—as measured by growth, inflation, and current account outcomes—with the latter a proxy for the extent and speed of economic adjustment. (Haque and Khan (1998) summarize this research.) Recent IMF research has focused on more nuanced questions and made more pointed inquiries into the factors contributing to program success.

An advance in the research—and an organizing device for this book as well as a distinguishing feature of many of its chapters—has been to recognize that program effectiveness needs to be linked to the quality of program design and implementation, as well as to the degree of a country’s external vulnerability. Analyses of effects before and after the adoption of a program implicitly assume either that the quality of policy design and the implementation of those policies do not vary across programs or that they do not matter. Since they obviously do matter, the links among design, implementation, and effectiveness are increasingly being explored. These links are complex, and, hence, researchers have focused on various elements of a large set of possibilities, guided, in part, by their inherent interest in the links but also constrained by their limited ability to quantify measures of design and implementation and, hence, subject them to statistical analysis. At the same time, interest has persisted in carrying out direct examinations of program effectiveness without focusing on design and/or implementation but with a clearer recognition that country conditions influence both the incentives for policy reform and the confidence of international capital markets that is necessary to reinforce domestic reform efforts.

Thus, the questions motivating recent research are framed as follows:

  • How—and how much—does success depend upon the design of the program?

  • To the extent that differences in program outcomes reflect differences in the quality of their actual implementation, why does implementation vary and how is it related, in particular, to program “ownership,” or the commitment by country authorities to the policy reform package?

  • Do differing economic conditions, such as the levels of external debt and reserves, influence the willingness and ability of countries, private markets, and the IMF to coordinate to achieve success?

  • If a program brings an improvement in a country’s economy, does that reflect the IMF’s policy advice, its lending, its monitoring of the country’s policies, or its “seal of approval” effect?

Though the questions are posed in these ambitious terms, the answers are necessarily more piecemeal and reflect, among other limitations, the particular ways in which the terms “design,” “implementation,” and “country conditions” are operationalized. The quality of design, sometimes construed as the composition of the policy advice (e.g., relative emphasis on fiscal or monetary discipline), is often inferred by comparing actual outcomes with those projected at the inception of the program. But the interpretation of these comparisons is not always straightforward. Similarly, assessments of implementation rely on such measures as the adherence of a program to its original conditions or its timetable or to the drawing down of the originally anticipated loan amount. The implicit assumption is that if the periodic reviews were delayed, the program was canceled, or a smaller-than-anticipated amount was borrowed, the program was not fully implemented. This may sometimes be true, but failure to meet conditions on the agreed schedule may also reflect corrections made as new information becomes available; and failing to draw the full amount may also reflect an improved economy with scaled-back requirements for external financing. Moreover, carrying out prescribed actions during the course of the program may be of little use if these actions are discontinued or reversed as soon as the program is over, necessitating the nontrivial task of assessing the sustainability of the policies put in place through the program. Finally, it is not straightforward to parsimoniously define the international and country context within which a program is formulated and implemented. Yet recent theoretical advances and empirical research suggest that such a context is relevant for program success. For example, applying theories proposing that success is most likely to be achieved when a country is in the “intermediate” state of external vulnerability—neither safe from a crisis nor imminently facing one—entails making judgments about, for example, levels of debt and reserves.

The rest of this overview reports on the contributions to this book, discussing them in the context of the broader questions they raise and pointing to the scope for further research. The next section discusses program design. This is followed by a section reviewing research on the determinants and the value of program implementation, also raising the issue of whether and how implementation is influenced by the nature of IMF governance. Next, the discussion of program effectiveness focuses—in line with recent research—on the IMF’s role in capital account crises and in “catalyzing” private capital flows. A final section summarizes key findings and possible research directions.

Program Design

A challenge for good design—and a recurring theme in this research—is the need to adapt design to changing global and country economic conditions while preserving uniformity of treatment (as emphasized, in particular, by Boughton in Chapter 8). To this end, an eclectic approach to program design has evolved. Ghosh and others (Chapter 1) state that “a variety of different analytical tools are used to analyze and predict developments in particular sectors while the financial programming framework is used to ensure that projections for different sectors are consistent with key balance-sheet identities.” They further note that although the IMF has maintained the overarching objective of “achieving (or maintaining) external viability,” the variation in program objectives has resulted in different types of programs:

  • classic stabilization and adjustment programs (whose primary objective is to correct a current account imbalance and restore official reserves to a safe level);

  • capital account crisis programs (whose primary objective is to restore confidence in international capital markets to staunch a sudden loss of private external financing); and

  • reform programs (whose priority is to support structural reforms designed to contribute to economic growth and stability over the long term to, for instance, meet the early needs of former transition economies and, more recently, of low-income developing countries).

Are IMF-supported programs well designed? The answer to this question depends on the definition of “well designed.” One measure of good design is the realism of—or, at least, the absence of systematic bias in—macroeconomic projections and performance targets subject to conditionality (Baqir, Ramcharan, and Sahay, Chapter 2). Although such a representation of good design has some validity, it needs to be interpreted with caution. First, if outcomes fall short of projections, it could be that ambitious goals were set to achieve the best possible outcomes; more cautious goals may well be met, or even exceeded, but may be insufficient to achieve a sustainable transition to a higher growth path. Second, the evidence is that the goals are more overoptimistic as the horizon gets longer; however, the early stage, when a program has to be jump-started, may be the most important. An alternative approach to assessing program design is by examining the composition of policy adjustment. Baqir, Ramcharan, and Sahay (Chapter 2) and Gupta and others (Chapter 5) examine, respectively, the relative importance and the composition of fiscal measures. Given the range of policy measures undertaken, composition can be assessed in many ways, and in future research the choices made could be guided by appropriate theoretical considerations.

Divergence in program projections and outcomes is particularly evident for medium-to-long-run growth projections. Consistent with the analysis of Musso and Phillips (2002), Ghosh and others (Chapter 1) do not find a significant bias in short-run growth projections. Beyond a horizon of about one year, however, the overprediction of growth increases as the horizon lengthens, and this is so regardless of the type of program. Baqir, Ramcharan, and Sahay (Chapter 2) also conclude that overprediction of growth remains even when account is taken of performance benchmarks (or, in their terminology, “intermediate targets”) that are not met. In other words, the overprediction is not just a reflection of proposed ambitious measures that are eventually not realized. They conclude that, therefore, the bias in predictions reflects either unwarranted optimism or an inadequate analytical framework. They reach similar conclusions about inflation. There is no consensus on the sources of these biases or on their implications, though.

Any bias in current account projections appears to depend on the type of program. Ghosh and others (Chapter 1) find that classic IMF stabilization and adjustment programs and capital account crisis programs systematically tend to underpredict external adjustment. This occurs, in part, because growth—and, hence, imports—do not pick up as rapidly as expected, leading to a greater-than-expected improvement in the trade balance. In contrast, reform programs tend to overpredict external adjustment—leading to a greater-than-projected buildup of external debt—particularly for low-income countries.

The differences between projections and outcomes appear to have different causes. These may include insufficient information on the economic conditions prevailing at the time of program design, shortcomings in the framework applied for program projections, and the need for projections that are acceptable to both the authorities and the IMF’s Executive Board. Formally, in fact, program projections are proposed by the authorities under programs formulated by them. Chapter 4 by Atoyan and others, which focuses on fiscal and external projections, concludes that inaccuracies in the preliminary statistical information base are the most serious source of projection errors. The authors note, however, that this is a common source of projection errors in policymaking that has been well documented in, for example, the formulation of U.S. monetary policy decisions. They further point to a “learning process” that takes place as new data become available and the size of the divergence declines. In contrast, in Chapter 3, Benelli suggests that the limited pool of IMF lending resources may induce a bias toward excessive optimism in the balance of payments projections of programs; although this does not explain why countries undertaking Stand-By Arrangements tend, on the contrary, to underestimate the balance of payments adjustment, it points to the possibility that, in practice, balance of payments projections are tailored to the financing provided rather than vice versa.

The contribution of the alleged analytical inconsistency to projection errors is, as yet, speculative. Although the underlying frameworks for program design meet the discipline of accounting identities, Baqir, Ramcharan, and Sahay (Chapter 2) conjecture that the design may not always be theoretically consistent. Behavioral or analytical inconsistency could arise because the toolkits currently used in program design—financial programming, the balance-sheet approach, vulnerability assessments, and debt-sustainability analyses—are not model-based, mutually consistent theoretical frameworks. In the face of a theoretical inconsistency, it would not be surprising to see policy outturns deviating from targets. Moreover, because inconsistently designed programs are likely to be more difficult to implement, they may also be less effective. Atoyan and others (Chapter 4) find that the projected timing and speed of adjustment in fiscal and external balances differs from those actually achieved and attribute this to inadequacies in the theoretical underpinnings, a plausible but not established conclusion. Thus, a fruitful area for future research would be to establish the extent to which behavioral consistency is lacking and assess how that affects program implementation and, ultimately, effectiveness.

Research could aid in the further integration of analytical frameworks, adapted to differing country circumstances. In Chapter 1, for instance, Ghosh and others note that the financial-programming framework is not easily adapted to designing reform programs or programs in capital-account-driven crises, because it takes growth and foreign financing as exogenous. Batista and Zalduendo (2004) argue that adopting an empirical, cross-country growth framework of reference may enhance the accuracy of growth projections under reform programs. Some progress along these lines has been achieved on both capital account issues and official financing with the development of debt-sustainability analysis and a balance-sheet approach to vulnerability, but there is scope for further advance in this direction. For instance, policy packages supported by reform programs and the associated conditionality now take into account the need to avoid buildups of external debt and debt-service obligations beyond specific thresholds in low-income countries. For capital account crisis programs, the typical policy package takes into account the linkages among different sectors of the economy in terms of both flows and stock positions, thus providing a more adequate cushion against relative price changes that may occur during adjustment to the crisis. Boughton (Chapter 8) also highlights, in the context of financial crises, the importance to program design of international investor psychology and domestic structural conditions.

In contrast to the comparison of projections and outcomes, the research on the com position of policy adjustment is more limited but points to the value of fiscal adjustment. In Chapter 2, Baqir, Ramcharan, and Sahay compare program objectives and performance targets with actual outcomes in a large set of recent programs. They conclude that, relative to the targets set, more ambitious fiscal contractions are associated with better growth performance while more ambitious monetary contractions are associated with worse outcomes. Chapter 5 by Gupta and others finds not only that strong fiscal consolidations (in absolute terms) are associated with higher economic growth in both the short and long terms but also that the composition of fiscal adjustment matters: fiscal adjustments achieved by curtailing current expenditures are, in general, more sustained and more conducive to growth. When public investment is also protected, the positive effect of fiscal adjustment on growth is further accentuated. Furthermore, Chapter 14 by Bulíř and Moon makes the point that the quality of fiscal adjustment is better under IMF programs (than in countries where there is no program) in the sense that it is directed more toward expenditure reductions than increases in revenue.

Program Implementation

Recent research on program implementation has focused on domestic political economy constraints. As noted, in empirical analyses, implementation has been measured in terms of program interruptions and completions. This, of course, is not necessarily the same thing as implementation of a policy package. Within the limits of the measures used, however, both the determinants of implementation and its influence on program outcomes have been examined. The findings suggest that a stronger political and institutional environment is conducive to better program implementation. Compared with programs that falter, better-implemented programs lead, in turn, to superior macroeconomic outcomes.

The implementation of IMF-supported programs depends to a significant extent on the domestic political and institutional environment. In Chapter 10, Ivanova and others quantify the factors that determine successful implementation of IMF-supported programs. They find that program implementation is weakened by strong special interests in the parliament, lack of political cohesion, political in stability, ethno-linguistic divisions, and inefficient bureaucracies. In contrast, they find that IMF effort—proxied by the number of IMF staff members involved and the design of conditionality—does not significantly affect the probability of successful implementation of IMF-supported programs. Despite the authors’ efforts to disentangle the direction of causation, the possibility remains that dealing with more difficult cases requires more staff and management resources.

Implementation has real consequences: the closer a program’s implementation is to specifications originally agreed with the IMF’s Executive Board, the more effective it appears to be. Chapter 9 by Nsouli, Atoyan, and Mourmouras finds that better program implementation is associated with better macroeconomic outcomes, including lower inflation, a stronger external position, and faster economic growth (though the results on growth are not statistically significant). Using a somewhat different approach (comparing program and non-program periods for the same country rather than comparing across countries), Chapter 15 by Chen and Thomas arrives at similar conclusions. It finds that program interruptions are associated subsequently with higher inflation, higher budget deficits, and lower growth than periods without a program. Completed programs are, instead, associated with marginally increased growth three years after the termination of the program.

The extent to which program conditions are implemented depends on the extent of domestic “ownership”—but this may itself depend on the content and form of conditionality. In Chapter 7, Khan and Sharma concede that ownership is an elusive concept but argue that it may be enhanced by giving the authorities greater flexibility in deciding how to achieve agreed outcomes. To this end, they favor “outcomes-based” conditionality, which involves “conditioning disbursements on the achievement of results rather than on the implementation of policies expected to eventually attain program objectives.” They note that much of program conditionality is already outcomes-based—particularly with regard to macroeconomic conditions such as a floor on net international reserves. They suggest other possible outcomes that could form the basis for conditionality: the trade balance, the current account, investment, and growth.

Although outcomes-based conditionality has attractive features, it is not straight for ward to operationalize. Country authorities are not in full control of outcomes. Thus, despite their best efforts, outcomes may diverge from those intended because of unforeseen developments. In contrast, the authorities have greater control over policies. Khan and Sharma note that policy- and outcomes-based conditionality will likely be combined in practice, with the precise combination reflecting “country circumstances” and “preferences.” A variation of outcomes-based conditionality is the targeting of financial assistance to countries “that are likely to make the best use of it,” as discussed in Chapter 11 by Jeanne and Zettelmeyer. These authors argue for ex ante conditionality, established before a country faces a crisis, rather than the ex post conditionality that currently follows a crisis in the context of an IMF-supported program. Ex ante conditionality specifies policy and outcome benchmarks that a country should meet to be eligible for financial support in the event of a liquidity crisis. As with outcomes-based conditionality, specification of ex ante conditionality has remained controversial. Experimenting with alternative forms of conditionality may be desirable, however, to improve its effectiveness. (In Chapter 14, for instance, Bulíř and Moon suggest that structural conditionality has not had a significant influence on the achievement of fiscal targets.)

The governance constraints faced by the IMF may hamper program design and implementation. In Chapter 6, Cottarelli argues that designing appropriate governance structures for an institution such as the IMF is difficult, because of underlying trade-offs between legitimacy and effectiveness. Attempts to enhance the IMF’s legitimacy by placing constraints on its decision-making process may reduce the organization’s operational flexibility and, hence, lower its effectiveness. He illustrates these trade-offs in three contexts. First, increased control of the IMF’s functioning by national political authorities may restrict the possible range of technical decisions. Echoing the suggestions reported earlier for changes to the IMF’s own approach to conditionality, he proposes that the IMF itself be monitored ex post—that is, on the basis of outcomes and results—rather than subjected to efforts to influence its technical processes. Second, Cottarelli is concerned that the legitimate need for transparency may conflict with the IMF’s operational goals. Third, and finally, while recognizing that uniformity of treatment across countries grants legitimacy to IMF programs, he cautions that it may create inefficiencies in their technical design and processing. In particular, he argues that too much emphasis has been given to formalistic procedural uniformity of treatment rather than to establishing “substantive evenhandedness.”

Further research, with a greater empirical bent, on the implications of the IMF’s governance structure is needed. Is the distribution of power among different members of the Executive Board only an issue of member equality and representation, or does it also affect the overall institution’s effectiveness? Do the governance structure of the IMF and domestic political economy interact? Does the governance structure exacerbate the political economy constraints that country authorities face by influencing their behavior in program negotiation and implementation?

Program Effectiveness

Pioneering research done at the IMF on program effectiveness examined the macroeconomic consequences of IMF-supported programs. These early efforts asked the overarching question whether an IMF-supported program helped improve macroeconomic performance as measured by growth, inflation, and current account outcomes. Despite the difficulties posed by the presence of “treatment effects” and the lack of differentiation across programs, this early literature reached three conclusions that have proved durable. (See Haque and Khan (1998) for a survey.) First, and not surprisingly, an IMF program helps to improve the country’s external balance. Second, inflation falls following the start of a program, but the effect is not statistically significant. Third, growth falls initially, but recovers in the medium term, though possibly not to its pre-program level, under classical and capital account crisis programs. Dicks-Mireaux, Mecagni, and Schadler (2000) find, though, that the growth effects have been stronger in low-income countries. Academics have largely continued to view IMF programs as zero-one events and pursued the analysis of their impact on overall economic performance. Examples of more recent academic research in this vein include Przeworski and Vreeland (2000), Hutchinson (2001), and Barro and Lee (2002).

Recent IMF research has tended to identify conditions under which IMF programs may succeed and to infer from those findings the features of the IMF that contribute to success. Research by the IMF’s staff has moved beyond the earlier literature in two important respects. First, researchers have sought to examine the conditions under which IMF programs are effective. In other words, rather than treating IMF programs as undifferentiated (and represented, therefore, in empirical work as a single dummy variable for the presence or absence of an IMF program), a greater effort has been made to identify the influence of initial country conditions. In this spirit, greater effort has also been made to distinguish different types of programs and, as noted above, to assess the costs of inadequate program implementation. Second, these differentiations have allowed a more forceful examination of the IMF’s comparative advantages and, therefore, of its informational and lending roles.

In turn, the conditions for IMF effectiveness have been sought in the context of capital account crises and catalysis of capital flows. Outcomes under programs supporting adjustment to capital account crises have been mixed. The usual experience has been that the relatively large shock faced by the country is reflected, during the first year of the program, in a continuing decline in output, employment, and consumption, but this is followed by a sharp, positive reversal in confidence and private capital flows (see Chapter 1 by Ghosh and others). Jeanne and Zettelmeyer conclude, in Chapter 10, that official lending in the context of the 1990s financial crises did not create moral hazard at the expense of global taxpayers. Rather, domestic taxpayers, who ultimately had to repay the IMF and other official creditors, bore the costs of the crises. To limit the risk of governments borrowing irresponsibly from international markets—and placing themselves subsequently in the position of requiring official financing—Jeanne and Zettelmeyer suggest that the appropriate response is not to raise the interest rates charged by the IMF, but rather to condition large-scale crisis lending on sound pre-crisis policies and institutions.

IMF research has also focused on a more medium-term response of capital flows to IMF-supported programs, in addition to the implications for financing at times of capital account crises. In Chapter 12, Cottarelli and Giannini find that the aggregate evidence on the response of capital flows to IMF-supported programs, which is often referred to as the catalytic effect of IMF financing, is weak. They argue that the absence of such an effect is all the more remarkable, since empirical studies often fail to control for actual policy change, thereby biasing their results in favor of such an effect. This is one area, however, in which country differentiation turns out to be crucial.

The evidence suggests IMF-supported programs are most catalytic when the initial conditions are not too negative or the external financing need is only potential and not actual. Bordo and others (Chapter 13) reach this conclusion (as does an earlier study by Mody and Saravia (2003)). They investigate the IMF’s role in maintaining emerging market economies’ access to international capital markets and find that both macroeconomic aggregates and capital flows improve following the adoption of an IMF-supported program, although they may initially deteriorate somewhat. They also find that IMF programs are most successful in improving capital flows to countries in a state of vulnerability—as distinct from extreme distress. In such countries, IMF programs are also associated with improvements in external fundamentals. Consistent with these findings, the catalytic effect of IMF lending also appears salient in the context of precautionary programs—that is, those undertaken for crisis prevention.

IMF research has also identified specific features of IMF-supported programs that may make a catalytic effect possible. Building on the extensive taxonomy proposed by Cottarelli and Giannini, Chapter 13 by Bordo and others concludes that it is implausible to assert that the IMF’s signaling role (the IMF’s conferring of its “seal of approval” on a country’s reform policies) is crucial to the catalytic process, since that assumes the IMF has information that others do not. Instead, they suggest, the IMF’s monitoring role allows countries on the reform path to signal commitment. They also find only ambiguous support for the hypothesis that more lending is more catalytic.

Looking ahead, assessing program effectiveness remains a challenge, but progress is possible. The challenge arises from the absence of counterfactual experiments, pervasive endogeneity issues, measurement errors in the data, and potential omitted-variable biases. Establishing causal links between IMF programs and outcomes requires considerable finesse. The creative use of alternative data sources and methodologies may help overcome some of the methodological difficulties. Case studies, nonparametric and Bayesian estimation methods (such as those used in Rossi and Rebucci (2005)), and simulations of alternative program scenarios could be attempted. A data-collection effort to extend the sample of programs analyzed by IMF researchers to include programs approved in the 1970s and 1980s would be very valuable. Finally, the data used by the IMF staff’s research are generally not publicly available, limiting their use by the academic community. Finding ways to provide access to program data without violating country confidentiality could enhance the credibility of the IMF staff’s analyses and encourage further research in this area. Perhaps more importantly, there is scope for further investigating program modalities and the channels through which they succeed or fail. This would help in the design of more effective programs in the future. Joint analysis of program design, implementation, and effectiveness, in particular, is likely to be a promising direction for future research in light of linkages highlighted by the research reviewed in this book.


The contribution of recent IMF research has been the more precise identification of the conditions necessary for the success of IMF programs. The research has moved fruitfully from the question “Do programs work or not?” to “Under what conditions do programs work?” The challenge has been to give structure to this more nuanced question. The contributions to this book point to features of program design, the quality of program implementation, and the country conditions likely to contribute to program success. Much remains to be done, however. Not least is the challenge to further characterize the relevant design, implementation, and country conditions in the context of different types of programs and countries.

On program design, the research both points to specific recommendations and calls for future research. Among the specific recommendations, the value of fiscal adjustment is underscored, as is the effort to increase the accuracy of program projections. In turn, the quality of program projection is identified with more accurate and comprehensive information, especially on initial conditions. Authors call for more refined theoretical analytical frameworks to deal, for example, with capital account crises and the determinants of long-term growth.

Variations in program-implementation experiences tend to reflect differences in domestic institutions and political constraints. These findings are consistent with the call for greater country ownership of IMF-supported programs. Future research could usefully analyze more carefully the determinants and impact of program conditionality. The IMF’s governance structure—in the specific sense of how operational control is exercised by national authorities, the degree of transparency, and the manner in which uniformity of treatment across member countries is achieved—may also be an important influence on program design and implementation.

Recent research on program effectiveness has focused on the IMF’s role in the context of capital account crises and in catalyzing capital flows, distinguishing among different country economic conditions in evaluating success. In the resolution of capital account crises, the finding is that private creditors and the IMF we relargely repaid; hence, to protect domestic taxpayers who bore much of the costs of the crises, the suggestion is that IMF lending be conditioned on the quality of pre-crisis policies and institutions. In helping countries maintain medium-term access to international capital markets, the IMF may be most effective when a member country is vulnerable to, but not yet in, a crisis. The research points to the value of a country committing itself to an altered policy course and using IMF monitoring as a signal of its commitment to reform. Further research will benefit from a more precise characterization and analysis of the varieties of IMF programs. New empirical approaches that enhance analysts’ ability to attribute specific outcomes to IMF programs would also be useful.


    BarroRobert J. and Jong-WhaLee2002“IMF Programs: Who Is Chosen and What Are the Effects?”NBER Working Paper No. 8951 (Cambridge, Massachusetts: National Bureau of Economic Research).

    BatistaCatia and JuanZalduendo2004“Can the IMF’s Medium-Term Growth Projections Be Improved?”IMF Working Paper 04/203 (Washington:International Monetary Fund).

    Dicks-MireauxLouisMauroMecagni and SusanSchadler2000“Evaluating the Effect of IMF Lending to Low-Income Countries,”Journal of Development EconomicsVol. 61No. 2 pp. 495526.

    HaqueNadeem Ul and Mohsin S.Khan1998“Do IMF-Supported Programs Work? A Survey of the Cross-Country Empirical Evidence,”IMF Working Paper 98/169 (Washington: International Monetary Fund).

    HutchisonMichael M.2001“A Cure Worse than the Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs,”NBER Working Paper No. 8305 (Cambridge, Massachusetts: National Bureau of Economic Research).

    International Monetary Fund (IMF)2005“The IMF’s Multilateral Surveillance: Draft Issues Paper for an Evaluation by the Independent Evaluation Office”available on the Web at

    ModyAshoka and DiegoSaravia2003“Catalyzing Capital Flows: Do IMF Programs Work as Commitment Devices?”IMF Working Paper 03/10 (Washington: International Monetary Fund). Forthcoming in Economic Journal.

    MussoAlberto and StevenPhillips2002“Comparing Projections and Outcomes of IMF-Supported Programs,”Staff PapersInternational Monetary FundVol. 49No. 1 pp. 2248.

    PrzeworskiAdam and James RaymondVreeland2000“The Effect of IMF Programs on Economic Growth,”Journal of Development EconomicsVol. 62No. 2 pp. 385421.

    RossiMarco and AlessandroRebucci2005“Measuring Disinflation Credibility Under IMF-Supported Programs: A Bayesian Approach with an Application to Turkey” (unpublished manuscript; Washington: International Monetary Fund). An earlier version of this paper was issued as IMF Working Paper 04/208.

The authors are grateful to Timothy Lane, Anne Krueger, and Raghuram Rajan for their valuable comments in the preparation of this overview and to Paul Gleason for overseeing the copyediting and production of this publication.

In contrast, the effects of surveillance (the analysis of economic conditions, policies, and prospects in member countries and the global economy) are felt in a diffuse manner, contemporaneous with many other economic developments, over an extended period and are thus not easy to identify. See IMF (2005).

The appropriate techniques have, not surprisingly, remained controversial. A program must be judged against a benchmark, or the outcome that would have occurred if the program had not been put in place. This counterfactual experiment is not observable. Moreover, the benchmark evolves with the changing world economy and the country’s economic conditions.

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