Is Fiscal Adjustment More Durable When The IMF is Involved? 1
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Citations
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Does membership on the UN Security Council influence IMF conditionality
How to evaluate the effects of IMF conditionality
Aid Volatility and Donor-Recipient Characteristics in 'Difficult Partnership Countries'
International demands for austerity: Examining the impact of the IMF on the public sector
References
Political economy in macroeconomics
The Voracity Effect
The Behavior of U. S. Public Debt and Deficits
The effect of IMF programs on economic growth
What explains the success or failure of structural adjustment programs
Related Papers (5)
Frequently Asked Questions (13)
Q2. What future works have the authors mentioned in the paper "Is fiscal adjustment more durable when the imf is involved?" ?
The findings in this paper are not definitive and the possibilities for further research are extensive. Second, the policy reaction function can be specified differently, reflecting, for example, policies that would stabilise the debt-to-GDP ratio or that would be based on ‘ fiscal rules ’.
Q3. What were the main factors that weakened the implementation of the programme?
Regarding the former, strong special interests, political instability, inefficient bureaucracies, lack of political cohesion, and ethno-linguistic divisions weakened programme implementation.
Q4. How did the adjustment affect revenue performance after the end of the programme?
in IMF-supported programmes that included structural conditions, the adjustment was effected primarily through sharp expenditure compression in order to offset revenue declines.
Q5. o rmal ity test (f) 0.05 1.?
Fp rog ram me d u mm ya0 .01 3 8(0 .88 )0 .01 0 7(0 .67 )0 .01 8 0(0 .85 )Co n diti ona li tyva ri able sSt ruct u ral con d itio n alit y(d u mm y)b0 .04 0 7(3 .10 )0 .03 8 9(3 .19 )0 .03 6 8(3 .20 )0 .03 2 4(4 .01 )0 .06 2 0(4 .49 )0 .04 9 7(4 .12 )R 20 .45 40 .44 90 .50 50 .47 00 .31 90 .32 20 .37 10 .33 70 .44 80 .45 20 .53 40 .50 3Lo g -lik elih o o d1 7 6 .81 7 6 .31 8 2 .31 7 8 .41 6 6 .71 6 6 .91 7 1 .11 6 8 .21 4 4 .11 4 4 .61 5 2 .51 4 9 .3N u mb ero fo b serv atio n s1 1 21 1 21 1 21 1 21 0 91 0 91 0 91 0 99 79 79 79 7N o rmal ity test [w2 (2,2 )]1 6 .41 2 4 .12 9 .26 2 2 .82 2 6 .83 2 5 .54 2 3 .63 2 3 .22 2 1 .23 1 6 .34 1 8 .94 2 6 .62H eter o sced asti city test (F) 1 .36 1 .05 1 .02 1 .55 0 .52 0 .77 0 .64 0 .96 0 .72 1 .48 0 .92 0 .39
Q6. What was the effect of the structural conditionality variables on expenditure development?
The structural conditionality variables were negative and significant, suggesting relative expenditure compression in countries with a structural conditionality of 2 percentage points of GDP or more.
Q7. How much of the fiscal balance was improved in non-programme countries?
The fiscal balance improved in two-thirds of all countries by an average of 2 percentage points of GDP between the pre-programme and post-programme periods or between 1993 and 1999 for the nonprogramme countries (Figure 1 and Table 2).
Q8. What is the effect of structural conditionality on post-programme fiscal performance?
post–programme fiscal performance in those countries was driven by accelerating expenditure compression, which may not be a bad thing, provided, for example, the pre–programme level of spending was wasteful or that a statist budget was replaced with a less intrusive one.
Q9. What is the appropriate technique for evaluating IMF-supported programmes?
An appropriate technique is the general evaluation estimator (GEE), due to Goldstein and Montiel (1986), which constructs counterfactual economic policies first and then tests the importance of IMF-supported programmes.
Q10. How high was the probability of a reversal in fiscal adjustment?
15 Gupta et al. (2002) reported that the probability of a reversal in fiscal adjustment was as high as 70 percent at the end of the second post-programme year for low-income countries.
Q11. What is the likelihood of waivers being positively related to the political clout of individual?
Providing the macroeconomic programme remained on track, the missed condition would likely be waived, the likelihood of waivers being positively related to the political clout of individual countries (Bird, 2002).
Q12. How many countries improved their fiscal balances after the end of the programme?
The magnitude of the post–programme fiscal improvement was not uniform, however, and nonprogramme countries improved their fiscal balances by more than programme countries: 3 and 12 of a percentage points of GDP, respectively.
Q13. What was the median end-period observation for non-structural countries?
the nature of the initial disequilibrium differed across countries: in nonstructural programme countries, GDP declined more sharply prior to the programme and their rates of inflation and GDP per capita were higher (Table 3).