Do IMF Programs Stimulate Private Sector Investment?

Pietro Bomprezzi, Silvia Marchesi and Rima Turk-Ariss
Authors registered in the RePEc Author Service: Rima Turk Ariss

No 520, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper investigates the dynamic aggregate response of firm investments to the approval of an IMF arrangement. Using a local projection methodology, we Â…nd that distinguishing between General Resource Account (GRA) and Poverty Reduction and Growth Trust (PRGT) Â…nancing matters for the path of investment. Following a GRA arrangement, investments start to increase after two years, while the effect is quite limited after a PRGT. Adopting a stacked difference-in-differences estimator and exploiting firm-level characteristics, we find that firms having a domestic ownership, relying more on external finance, or which are more subject to uncertainty, invest more following a GRA agreement.

Keywords: IMF; Firm investment; Local Projection; Financial Frictions; Difference-in-Differences (search for similar items in EconPapers)
JEL-codes: E22 F33 O19 (search for similar items in EconPapers)
Pages: 40
Date: 2023-05, Revised 2023-05
New Economics Papers: this item is included in nep-cfn
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Working Paper: Do IMF Programs Stimulate Private Sector Investment? (2022)
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