The IMF Approach to Economic Stabilization

42 Pages Posted: 15 Feb 2006

See all articles by Michael L. Mussa

Michael L. Mussa

International Monetary Fund (IMF) - Research Department; National Bureau of Economic Research (NBER)

Miguel A. Savastano

Monetary and Capital Markets Departrment

Date Written: July 1999

Abstract

This paper explains the IMF approach to economic stabilization. It argues that a Fund-supported program is a process, comprising six broadly defined phases, that evolves along a multiplicity of potential pathways. The paper discusses the three-pronged approach to stabilization at the core of all IMF-supported programs, stresses the iterative character of "financial programming," and explains the rationale for setting quantitative performance criteria for fiscal and monetary policy in IMF-supported arrangements. A main theme is that IMF-supported programs contain a great deal of flexibility to respond both to differences in circumstances and to changes in conditions in individual cases.

Keywords: IMF-supported programs economic stabilization quantitative approach

JEL Classification: E52 E61 F33 F34 F41

Suggested Citation

Mussa, Michael L. and Savastano, Miguel A., The IMF Approach to Economic Stabilization (July 1999). IMF Working Paper No. 99/104, Available at SSRN: https://ssrn.com/abstract=880631

Michael L. Mussa (Contact Author)

International Monetary Fund (IMF) - Research Department

700 19th Street NW
Washington, DC 20431
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Miguel A. Savastano

Monetary and Capital Markets Departrment ( email )

700 19th Street NW
Washington, DC 20431
United States