Institutions, Program Implementation, and Macroeconomic Performance

42 Pages Posted: 9 Feb 2006

See all articles by Saleh M. Nsouli

Saleh M. Nsouli

International Monetary Fund (IMF)

Rouben Atoian

University of North Carolina at Chapel Hill

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: September 2004

Abstract

This paper assesses empirically the links among a country`s institutions and political environment, its implementation of IMF-supported programs, and macroeconomic performance in a sample of 197 programs approved between 1992 and 2002. We find that a stronger institutional and political environment is associated with better macroeconomic outcomes, especially at longer time horizons. This direct beneficial effect of institutions on macroeconomic outcomes is in addition to their indirect effect through better program implementation. We also find that program implementation exerts an independent influence on macroeconomic outcomes, especially over shorter time horizons of up to two years. Better-implemented programs are associated with lower inflation and with initially weaker but ultimately stronger external and fiscal outcomes, but with a statistically insignificant impact on economic growth.

Keywords: Institutions, Political Economy, IMF-supported programs, macroeconomic performance

JEL Classification: E61, F33, F34

Suggested Citation

Nsouli, Saleh M. and Atoian, Rouben and Mourmouras, Alexandros, Institutions, Program Implementation, and Macroeconomic Performance (September 2004). IMF Working Paper No. 04/184, Available at SSRN: https://ssrn.com/abstract=879009

Saleh M. Nsouli (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Rouben Atoian

University of North Carolina at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

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