{
  "title": "Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method",
  "publication": "IMF Working Papers, May 5, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/05/05/evaluating-the-impact-of-imf-nonfinancial-programs-using-the-synthetic-control-method-44888",
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  "summary": "We use the Synthetic Control Method to study the effect of IMF advice on economic growth, inflation, and investment. The analysis exploits the existence of IMF programs that do not involve any financing (Policy Support Instruments, “PSIs”).",
  "sections": [
    {
      "heading": "Methodology and scope",
      "content": "- Uses the Synthetic Control Method to study the effect of IMF advice on economic growth, inflation, and investment.\n- Exploits IMF programs that do not involve any financing (Policy Support Instruments, “PSIs”) to isolate the effects of IMF monitoring, advice, and approval (as opposed to direct financial assistance).\n- Focuses on non-crisis countries with non-financial programs, which:\n  - Mitigates the reverse causality problem.\n  - Facilitates the construction of counterfactuals."
    },
    {
      "heading": "Key empirical findings",
      "content": "- Treated countries add about 1 percentage point in annual real GDP per capita growth.\n- Inflation is lower by some 3 percentage points per year in PSI-treated countries.\n- No evidence found for an impact on total investment and the resulting capital stock.\n- PSI-treatment appears to stimulate foreign direct investment."
    },
    {
      "heading": "Outcomes and interpretation",
      "content": "- Growth:\n  - Effect reported: about 1 percentage point annual real GDP per capita growth for treated countries.\n- Inflation:\n  - Effect reported: lower inflation by some 3 percentage points per year following PSI treatment.\n- Investment:\n  - Total investment and capital stock: no detectable impact.\n  - Foreign direct investment: evidence of stimulation following PSI treatment.\n- Identification strengths:\n  - Non-financial programs enable isolation of monitoring/advice effects separate from financing.\n  - Non-crisis status of PSI countries reduces reverse causality concerns and improves counterfactual validity.\n\n---\n\n Content in this bundle\n\n- Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method\n  - Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/05/05/evaluating-the-impact-of-imf-nonfinancial-programs-using-the-synthetic-control-method-44888"
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    "[Markdown version](/en/publications/wp/issues/2017/05/05/evaluating-the-impact-of-imf-nonfinancial-programs-using-the-synthetic-control-method-44888/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2017/05/05/evaluating-the-impact-of-imf-nonfinancial-programs-using-the-synthetic-control-method-44888/index.json)",
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    "Authors: Monique Newiak, Tim Willems",
    "Published: May 5, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475599039.001",
    "Uses the Synthetic Control Method to study the effect of IMF advice on economic growth, inflation, and investment.",
    "Exploits IMF programs that do not involve any financing (Policy Support Instruments, “PSIs”) to isolate the effects of IMF monitoring, advice, and approval (as opposed to direct financial assistance).",
    "Focuses on non-crisis countries with non-financial programs, which:",
    "Treated countries add about 1 percentage point in annual real GDP per capita growth.",
    "Inflation is lower by some 3 percentage points per year in PSI-treated countries.",
    "No evidence found for an impact on total investment and the resulting capital stock.",
    "PSI-treatment appears to stimulate foreign direct investment.",
    "Growth:",
    "Inflation:",
    "Investment:",
    "Identification strengths:",
    "**Evaluating the Impact of Non-Financial IMF Programs Using the Synthetic Control Method**"
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