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The determinants of IMF fiscal conditionalities: economics or politics?

Guimaraes, Bernardo and Ladeira, Carlos Eduardo (2017) The determinants of IMF fiscal conditionalities: economics or politics? CFM discussion paper series (CFM-DP2017-03). Centre For Macroeconomics, London, UK.

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Abstract

Conditionalites, measures that a borrowing country should adopt to obtain loans from the International Monetary Fund (IMF), are pervasive in IMF programs. This paper estimates the effects of political and economic factors on the number of conditions and on the size of fiscal adjustment requested in an agreement. As found in the literature, political proximity of the borrowing country to the Fund’s major shareholders has an important effect on the number of conditions. However, the magnitude of fiscal adjustment requested by the IMF is strongly affected by the size of a country’s fiscal deficit but not by political proximity. We also find a very small correlation between the number of conditions and the requested fiscal adjustment.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information: © 2017 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions
F - International Economics > F5 - International Relations and International Political Economy > F53 - International Agreements and Observance; International Organizations
H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit; Surplus
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt; Debt Management
Sets: Research centres and groups > Centre for Macroeconomics
Date Deposited: 12 Dec 2017 11:16
Last Modified: 15 Aug 2019 23:27
URI: http://eprints.lse.ac.uk/id/eprint/86171

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