Impact of IMF Assistance on Economic Growth Revisited

Information
Title: Impact of IMF Assistance on Economic Growth Revisited
Issue: Vol. 8, No 3, 2015
Published date: 20-10-2015 (print) / 20-10-2015 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Jan Fidrmuc
Stefani Kostagianni
Keywords: IMF; economic growth; endogeneity; instrumental variables
DOI: 10.14254/2071-789X.2015/8-3/2
DOAJ: https://doaj.org/article/44eb10b84159442aa542cc050eeb2688
Language: English
Pages: 32-40 (9)
JEL classification: O11, F33
Website: http://www.economics-sociology.eu/files/ES_8_3_Fidrmuc.pdf
File https://www.economics-sociology.eu/files/ES_8_3_Fidrmuc.pdf
Abstract

We investigate the effect of IMF assistance on economic growth in a broad panel of countries. We argue that countries are likely self-select into seeking IMF involvement based on their economic performance. We control for such endogeneity by means of instrumental variables. Our findings indicate that the contemporaneous effect of the IMF involvement is insignificant while the lagged effect is positive. The 2SLS effect is larger than the OLS one, indicating that the latter is downward biased.