Evaluating the impact of IMF programs: A comparison of matching and instrumental-variable estimators

We examine the impact of IMF programs on economic performance in 95 developing countries over the period 1993–2002. Three macroeconomic measures of economic performance are considered: the real per capita economic growth rate, the ratio of the fiscal surplus to GDP, and the ratio of the current account surplus to GDP. Three estimation techniques are used: censored-sample, full-sample instrumental-variable, and matching. Substantively, we find little statistical support that IMF programs contemporaneously improve real economic growth in participating countries, but stronger evidence of an improvement in economic growth in years following a program. We find that both the fiscal ratio and the current-account ratio improve contemporaneously with IMF participation relative to the counterfactual, with effects in succeeding years differing little from the impact effects. We conclude that the program-effect estimates of matching and other estimators will differ largely because of the sample included in estimation. Matching by its nature excludes country episodes associated with extreme values of the propensity score, while the instrumental-variable estimator includes those. If there is heterogeneity of performance response in extreme vs. moderate cases, the estimates differ systematically between the two techniques. JEL codes F33 · F34 · C34     

Turkey and the IMF: A case study in the political economy of policy implementation

Research into IMF program implementation has usually taken the form of large sample regression analyses. A more detailed explanation is offered in this paper through a case study of program implementation in Turkey between 1999 and 2004. Our research is based on a series of in-depth interviews with policy makers, program negotiators, bureaucrats, interest groups and IMF personnel. Our results reinforce hypotheses that emerge from the theory of implementation and the large sample econometric work, but they also offer new and enhanced explanations. Program implementation depends on a range of factors which interact with one another. These include domestic political economy factors, such as the importance of special interest groups, political cohesiveness and program ownership by the government and the IMF, but also other idiosyncratic factors such as, in the case of Turkey, the existence of a crisis, the desire to join the EU and the role of influential technocrats. Our research has implications for the design of IMF programs.