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Over‐optimism and the IMF

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  • Graham Bird

Abstract

One way of assessing the impact of IMF programmes is to see whether performance and policy targets are achieved. However, does a failure to hit targets mean that the programmes have been unsuccessful, or could it be that targets have been too ambitious? This paper analyses political economy factors impinging on governments and on the IMF that may lead to serial over‐optimism. It goes on to examine the empirical evidence that is consistent with over‐optimism. Having considered whether over‐optimism is a cause for concern, and concluded that it is, the paper considers reforms that would allow realism to replace it. By eliminating over‐optimism it is argued that the psychology of failure surrounding IMF programmes could be significantly reduced or even broken.

Suggested Citation

  • Graham Bird, 2005. "Over‐optimism and the IMF," The World Economy, Wiley Blackwell, vol. 28(9), pages 1355-1373, September.
    • Handle: RePEc:bla:worlde:v:28:y:2005:i:9:p:1355-1373
    DOI: 10.1111/j.1467-9701.2005.00737.x
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    1. Sebastian Edwards, 1989. "The International Monetary Fund and the Developing Countries: A Critical Evaluation," NBER Working Papers 2909, National Bureau of Economic Research, Inc.
    2. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
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    17. Ramkishen Rajan & Graham Bird, 2001. "Economic Globalisation," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(3), pages 1-18, July.
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    1. Olaf Hübler & Lukas Menkhoff & Chodechai Suwanaporn, 2008. "Financial Liberalisation in Emerging Markets: How Does Bank Lending Change?," The World Economy, Wiley Blackwell, vol. 31(3), pages 393-415, March.
    2. ., 2016. "Introduction and overview: the purposes and operations of the IMF," Chapters, in: The International Monetary Fund, chapter 1, pages 1-18, Edward Elgar Publishing.
    3. Bessma Momani, 2007. "IMF staff: Missing link in fund reform proposals," The Review of International Organizations, Springer, vol. 2(1), pages 39-57, March.
    4. Bernhard Reinsberg & Thomas Stubbs & Alexander Kentikelenis, 2022. "Compliance, defiance, and the dependency trap: International Monetary Fund program interruptions and their impact on capital markets," Regulation & Governance, John Wiley & Sons, vol. 16(4), pages 1022-1041, October.
    5. Martin Iseringhausen & Ms. Mwanza Nkusu & Wellian Wiranto, 2019. "Repeated Use of IMF-Supported Programs: Determinants and Forecasting," IMF Working Papers 2019/245, International Monetary Fund.

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