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

35 Pages Posted: 25 Jun 2004

Date Written: August 2005

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.

Keywords: IMF programs, growth, compliance, conditionality

JEL Classification: F33, F34, O57

Suggested Citation

Dreher, Axel, IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality (August 2005). Available at SSRN: https://ssrn.com/abstract=558401 or http://dx.doi.org/10.2139/ssrn.558401

Axel Dreher (Contact Author)

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

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