On the Conditional Effects of IMF Program Participation on Output Growth

47 Pages Posted: 13 Sep 2010

See all articles by Michael Binder

Michael Binder

Goethe University Frankfurt; CESifo (Center for Economic Studies and Ifo Institute)

Marcel Bluhm

The Block

Date Written: August 31, 2010

Abstract

The empirical evidence currently available in the literature regarding the effects of a country's IMF program participation on its output growth is rather mixed. To shed new evidence on this issue, in this paper we specify a state- dependent panel data model accounting in particular for program participation selection and the potential conditionality of the output growth effects of program participation on a country's degree of program implementation and institutional factors such as quality of governance, internal stability, health, and educational attainment. We find that the effects of IMF program participation on output growth vary systematically with the degree of program implementation as well as our index of institutional factors, and that these effects are positive only if the IMF program is implemented to a sufficient degree or if the program participation is coupled with sufficient progress in improving institutional quality.

Keywords: IMF program participation, output growth, panel sample selection models, conditional pooling

JEL Classification: O11, O19, C33

Suggested Citation

Binder, Michael and Bluhm, Marcel, On the Conditional Effects of IMF Program Participation on Output Growth (August 31, 2010). CESifo Working Paper Series No. 3161, Available at SSRN: https://ssrn.com/abstract=1676182 or http://dx.doi.org/10.2139/ssrn.1676182

Michael Binder (Contact Author)

Goethe University Frankfurt ( email )

Faculty of Economics and Business Administration
Grüneburgplatz 1
Frankfurt, 60323
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Marcel Bluhm

The Block ( email )

New York
United States

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