Does IMF Support Accelerate Inflation Stabilization?

Abstract

This paper analyzes the effects of International Monetary Fund (IMF) arrangements on the timing of inflation stabilization programs. By providing financial support that may allow the reduction of inflation without incurring politically unacceptable economic costs, the IMF can hasten stabilization. But, since support can also reduce the costs of inflation, it may instead delay it. Empirical results obtained for 10 countries that suffered from chronic inflation fail to support the hypothesis that IMF financial assistance accelerates stabilization. Rather, they indicate that other factors have a greater impact on the timing of stabilizations: greater fragmentation of the political system delays stabilization, while a higher level of inflation hastens it.

IMF lending arrangements in emerging and developing countries – participation and prediction

“…• Logit analysis: Joyce (1992Joyce ( ) -45 countries, 1980Joyce ( -1984Bird (1996Bird ( ) -40 countries, 1980Bird ( -1985Veiga (2005Veiga ( ) -10 countries, 1957Veiga ( -1999Andersen, Harr, and Tarp (2006) -102 countries, 1995-2000Pop-Eleches (2009) -Latin American and East European countries, 1982-2001Dreher, Sturm, and Vreeland (2009) -197 countries, 1951-2004Copelovitch (2010Copelovitch ( ) -47 countries, 1984Copelovitch ( -2003• Probit analysis: Conway (1994) -74 countries, 1976-1986Knight and Santaella (1997) -91 developing countries, 1973-1991Bird and Rowlands (2001) -95 countries, 1974-1994Marchesi (2003Marchesi ( ) -93 developing countries, 1983Marchesi ( -1995Dreher (2004Dreher ( ) -54 countries, 1976Dreher ( -1997Barro and Lee (2005) -130 countries, 1975-1999Eichengreen, Gupta, and Although a lot of studies have used the logit or probit regression as a statistical method, there are many similarities with the discriminant analysis, thus:…”

IMF conditionality: theory and evidence

“…Dreher (2006) summarizes studies evaluating the IMF's impact on economic growth. More recent evaluations are, among others, Barro and Lee (2005), Hajro andJoyce (2009), Jensen (2004), Dreher (2005Dreher ( , 2006, Nsouli et al (2005) and Veiga (2006). 41 See Goldstein and Montiel (1986) for an extensive treatment.…”

IMF Conditionality: Theory and Evidence

“…Dreher (2006) summarizes studies evaluating the IMF's impact on economic growth. More recent evaluations are, among others, Barro and Lee (2002), Hajro and Joyce (2004), Jensen (2004), Dreher (2005Dreher ( , 2006, Nsouli, Atoian and Mourmouras (2004) and Veiga (2005). 44 See Goldstein and Montiel (1986) for an extensive treatment.…”