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IMF Programs and Growth: Is Optimism Defensible? Reza Baqir, Rodney Ramcharan, and Ratna Sahay Full Text of this Article (PDF 316K) Abstract: IMF-supported programs
focus on key objectives (such as growth, inflation, and the external current
account) and on intermediate policy targets (such as monetary and fiscal
policies) needed to achieve these objectives. In this paper, we use a
new, large data set, with information on 94 programs between 1989 and
2002, to compare programmed objectives and policy targets to actual outcomes.
We report two broad sets of results. First, we find that outcomes typically
fell short of expectations in growth and inflation but were broadly in
line with the programmed external current account objectives. Similarly,
programmed intermediate policy targets were generally more ambitious than
the intermediate policy outcomes. Second, focusing on growth, we examine
the relationship between objectives and policy targets, and find differences
in the way ambitious monetary and fiscal targets affected the achievement
of the growth objective. On the one hand, more ambitious fiscal targets,
even when they were missed, led to better growth performance. On the other
hand, more ambitious monetary targets tended to be associated with lower
growth performance. |
