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, Vol. , pp. 1-42, 1999. 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
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Miguel A. Savastano

Monetary and Capital Markets Departrment ( email )

700 19th Street NW
Washington, DC 20431
United States

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