International demands for austerity: Examining the impact of the IMF on the public sector
Stephanie J. Rickard () and
Teri L. Caraway ()
Additional contact information
Stephanie J. Rickard: London School of Economics
Teri L. Caraway: University of Minnesota
The Review of International Organizations, 2019, vol. 14, issue 1, No 2, 35-57
Abstract What effects do International Monetary Fund (IMF) loans have on borrowing countries? Even after decades of research, no consensus exists. We offer a straightforward explanation for the seemingly mixed effects of IMF loans. We argue that different loans have different effects because of the varied conditions attached to IMF financing. To demonstrate this point, we investigate IMF loans with and without conditions that require public sector reforms in exchange for financing. We find that the addition of a public sector reform condition to a country’s IMF program significantly reduces government spending on the public sector wage bill. This evidence suggest that conditions are a key mechanism linking IMF lending to policy outcomes. Although IMF loans with public sector conditions prompt cuts to the wage bill in the short-term, these cuts do not persist in the longer-term. Borrowers backslide on internationally mandated spending cuts in response to domestic political pressures.
Keywords: IMF; Public sector; Conditionality; Government spending; Reform; Austerity; Wage bill; Loan conditions; Public sector employment; Backsliding (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11558-017-9295-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:revint:v:14:y:2019:i:1:d:10.1007_s11558-017-9295-y
Ordering information: This journal article can be ordered from
http://www.springer. ... iology/journal/11558
Access Statistics for this article
The Review of International Organizations is currently edited by A. Dreher
More articles in The Review of International Organizations from Springer
Bibliographic data for series maintained by Sonal Shukla ().