What Did Structural Adjustment Adjust?: The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans

Posted: 16 Apr 2005

See all articles by William Easterly

William Easterly

New York University - Department of Economics

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Abstract

Analysis of adjustment loans often overlooks their repetition to the same country. Repetition changes the nature of the selection problem. None of the top 20 recipients of repeated adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. About half of the adjustment loan recipients show severe macroeconomic distortions regardless of cumulative adjustment loans. Probit regressions for an extreme macroeconomic imbalance indicator and its components fail to show robust effects of adjustment lending or time spent under IMF programs. An instrumental variables regression for estimating the causal effect of repeated adjustment lending on policies fails to show any positive effect on policies or growth.

Keywords: Structural adjustment, Macroeconomic stability, National policies, Economic growth, World bank, IMF

JEL Classification: E6, F4, O1, O4

Suggested Citation

Easterly, William, What Did Structural Adjustment Adjust?: The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans. Journal of Development Economics, Vol. 76, No. 1, February 2005. Available at SSRN: https://ssrn.com/abstract=690268

William Easterly (Contact Author)

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

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