An attempt has been made to determine the variables that have a significant bearing on the economic and political institutional quality, taking a sample of member countries of IMF, especially focusing on the programme countries and prolonged users, during 1980-2012. Main results point towards a parliamentary form of government, governance and its related indicators, openness, freedom with regard to monetary, fiscal, investment and labour, and education as variables that significantly enhance institutional quality, while the presence of military in power, excessive strength of government and opposition in parliament, and foreign aid have a negative consequence for institutional quality.
JEL classification: B52, F33
The current study is motivated by the overall lackluster performance of IMF p rogrammes in recip ient countries in terms of econo mic growth consequences, and tries to explore the relevance of institutional determinants (that have a positively significant role in improving institutional quality in IMF programme countries, in the first place) in enhancing real economic growth in IM F programme countries; as otherwise highlighted by New Institutional Econo mics literature for countries generally. Moreover, the study also investigates the impact of these determinants through the channel of macroeconomic stability. Based on a time period of 1980-2010 (co inciding with a durat ion of increasing nu mber of IMF p rogrammes), the results mainly validate that institutional determinants overall play a positive role in reducing macroeconomic instability, and through it, and also independently, enhance real economic growth.
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