IMF Programs: Who is Chosen and What are the Effects?

By Robert J. Barro, Jong-Wha Lee. 2005

196 citations recorded by the source corpus.

IMF lending practices respond to economic conditions but are also sensitive to political-economy variables. Specifically, the sizes and frequencies of loans are influenced by a country's presence at the Fund, as measured by the country's share of quotas and professional staff. IMF lending is also sensitive to a country's political and economic proximity to some major shareholding countries of the IMF -- the United States, France, Germany, and the United Kingdom. We measured political proximity by voting patterns in the United Nations and economic proximity by bilateral trading volumes. These results are of considerable interest for their own sake but also provide instrumental variables for estimating the effects of IMF lending on economic performance. Instrumental estimates indicate that the size of IMF lending is insignificantly related to economic growth in the contemporaneous five-year period but has a significantly negative effect in the subsequent five years.

Subfields: Development

View Paper: https://www.semanticscholar.org/paper/455980ea5337c5bfdb3a6dfb27e37526ce89dd09

Citations in the corpus

• Multilateral Intermediation of Foreign Aid: What is the Trade-Off for Donor Countries? (2006, unknown): “Barro and Lee (2005) suggest that political factors affect IMF lending.”
• Can the West Save Africa (2008, unknown): “Barro and Lee (2005) fi nd that IMF “loans tend to be”
• Foreign aid, institutional quality, and growth (2014, unknown): “Worse yet, Barro and Lee (2005) actually found the effect of aid on growth to be negative.”
• IMF conditionality: theory and evidence (2008, unknown): “More recent evaluations are, among others, Barro and Lee (2005), Hajro and Joyce (2009), Jensen (2004), Dreher (2005, 2006), Nsouli et al. (2005) and Veiga (2006).”
• US politics and World Bank IDA-lending (2006, unknown): “An increasing number of academic studies indicating that political factors - in particular US political factors - do play a role in determining who receives IMF loans have emerged recently (e.g. Thacker, 1999, Barro and Lee 2002, Andersen et al .”
• IMF program compliance: Aggregate index versus policy specific research strategies (2006, unknown): “While none of the studies cited here found a long run positive effect—indeed, Barro and Lee (2005) report a statistically significant long run negative effect—Atoyan and Conway (2006) report evidence of an improvement in growth in the years following a program.”
• What do exogenous shocks tell us about growth theories (2007, unknown): “A natural disaster is defined as a natural event which overwhelms local capacity, necessitating a request for assistance from national or 6 Recent examples are Beck and Levine (2004), and Barro and Lee (2005).”