IMF-Supported Programs in Low Income Countries: Economic Impact over the Short and Longer Term
IMF Working Papers, December 31, 2013
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Bibliographic details
- Authors: Christian Mumssen, Yasemin Bal Gündüz, Christian H Ebeke, Linda Kaltani
- Published: December 31, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484356203.001
Scope and methodology
- Focus: sample composed exclusively of Low-Income Countries (LICs) over nearly three decades.
- Method: propensity score matching approach to control for selection bias.
- Distinction: disentangles effects of longer-term IMF engagement and short-term IMF financing/engagement.
Main empirical findings
- Longer-term IMF support:
- Definition used: at least five years of program engagement per decade.
- Associated outcomes:
- Helped LICs sustain economic growth.
- Boosted resilience by building fiscal buffers.
- Size of IMF financing:
- Finding: the size of IMF financing has no significant impact on economic growth.
- Interpretation offered: may point to the prominent role of IMF policy advice and institutional capacity building in the context of longer-term engagement.
- Short-term IMF engagement and financing:
- Forms included: augmentations of existing programs; short-term and emergency facilities.
- Associated outcomes: positively associated with a wide range of macroeconomic outcomes.
- Conditional impact: IMF financial support has the greatest impact on short-term growth when LICs face substantial macroeconomic imbalances or exogenous shocks.
Policy-relevant implications and interpretation
- Emphasis on sustained engagement:
- Longer-term engagement (≥ five years per decade) appears important for sustaining growth and building fiscal buffers in LICs.
- Role of IMF non-financial support:
- Policy advice and institutional capacity building are highlighted as potentially central channels through which longer-term IMF engagement affects growth, given the lack of significance of financing size on growth.
- Targeting short-term support:
- Short-term financial support is particularly effective for boosting short-term growth in contexts of substantial macroeconomic imbalances or exogenous shocks, suggesting targeted use of augmentations and emergency facilities.
Keywords and subject areas covered
- Subjects: Balance of payments, Balance of payments need, Current account balance, Education spending, Expenditure, Foreign direct investment, Health care spending, Inflation, Prices.
- Keywords (selected): Balance of payments need, country, Current account balance, economic growth, financing, Foreign direct investment, GDP, Global, Health care spending, IMF arrangement, IMF engagement, IMF financial support face, IMF program dummy, IMF programs, IMF staff calculation, IMF support, Inflation, longer-term IMF engagement, low-income countries, macroeconomic outcomes, program engagement, propensity score matching, WP.
Christian Mumssen, Yasemin Bal Gündüz, Christian H Ebeke, and Linda Kaltani. December 31, 2013. IMF Working Paper No. 2013/273. DOI: https://doi.org/10.5089/9781484356203.001.