Are IMF rescue packages effective? A synthetic control analysis of macroeconomic crises

Kevin Kuruc

Journal of Monetary Economics, 2022, vol. 127, issue C, 38-53

Abstract: Whether, and to what degree, IMF lending succeeds in stabilizing economies remains an open question. Here, a synthetic control analysis of macroeconomic crises with IMF intervention is performed—leveraging the existence of similar crises without intervention—that finds positive recovery effects. In the first five years following a crisis, output differences are, on average, nearly two percent of GDP per year. Consistent with a liquidity channel, effects are hump-shaped and fade in the medium run. An analysis of historical IMF forecasts provides evidence against selection as a spurious driver of this result, suggesting that these positive estimates are indeed causal.

Keywords: IMF; Financial crises; Synthetic controls; Business cycle policy (search for similar items in EconPapers)
JEL-codes: E3 E6 F4 O5 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:127:y:2022:i:c:p:38-53

DOI: 10.1016/j.jmoneco.2022.02.002

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