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On the conditional effects of IMF program participation on output growth

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  • Binder, Michael
  • Bluhm, Marcel

Abstract

The empirical evidence currently available in the literature regarding the effects of a country’s IMF program participation on its output growth is rather inconclusive. In this paper we propose and estimate a panel data sample selection model featuring state dependence. As in this model the output growth effects of program participation can be conditional on the realization of a state variable (conditional pooling), our framework may reconcile previous empirical evidence based on models without state dependent effects. We find that the effects of IMF program participation on output growth vary systematically with an index reflecting a country’s institutional record, and that output growth effects of program participation are significantly positive only if the IMF program is coupled with sufficient improvement of the institutional record.

Suggested Citation

  • Binder, Michael & Bluhm, Marcel, 2017. "On the conditional effects of IMF program participation on output growth," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 192-214.
    • Handle: RePEc:eee:jmacro:v:51:y:2017:i:c:p:192-214
    DOI: 10.1016/j.jmacro.2017.01.006
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    References listed on IDEAS

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    Cited by:

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    3. Philippe Burger & Estian Calitz, 2021. "Covid‐19, Economic Growth and South African Fiscal Policy," South African Journal of Economics, Economic Society of South Africa, vol. 89(1), pages 3-24, March.
    4. Balima, Hippolyte W. & Sokolova, Anna, 2021. "IMF programs and economic growth: A meta-analysis," Journal of Development Economics, Elsevier, vol. 153(C).
    5. Tuomas Malinen & Olli Ropponen, 2022. "To default or not? The aftermath of sovereign defaults and IMF programs in economic crises," The World Economy, Wiley Blackwell, vol. 45(7), pages 2052-2083, July.

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    More about this item

    Keywords

    Conditional pooling; IMF program participation; Output growth; Panel sample selection models;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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