Abstract:The IMF was created right after World War II to manage an international payments system based on fixed exchange rates. In its early years the Fund’s remedy to balance-of-payments crises consisted in reducing domestic aggregate demand. As a result, its policies were seen as recessive. With the collapse of the fixed exchange rates system in the early 70s, the Fund lost its clients in the developed world and turned to developing countries. In the Fund’s approach, developing countries suffered crises not because o… Show more
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