Test Your Knowledge on the Impact of IMF Programs on Growth

Determinants of IMF Programs and Their Effect on Growth

• IMF programs are controversial and often met with popular resistance.
• The research question is the effect of IMF programs on growth.
• The sample includes 135 countries observed from 1951-1990.
• The problem of selection arises as access to IMF financing is not always predictable.
• Przeworski and Vreeland find that the IMF signs agreements with countries facing balance of payments surpluses.
• Participation in an IMF program is a bivariate decision made separately by the country and the IMF.
• There are four dimensions to consider: government seeking agreement, IMF seeking agreement, government continuing program, and IMF continuing program.
• Factors influencing government decisions include foreign currency reserves, BoP deficits, debt levels, and investment levels.
• The number of years previously spent with an active IMF program and the number of other countries with an active program also influence government decisions.
• IMF decisions are influenced by the deficit of the applicant country, the number of countries involved, and the nature of the requesting country's government.
• Governments seek IMF agreements for loans and external support on restrictive fiscal policies.
• The determinants of participation in IMF programs are complex and multifaceted.