Assessing the Effectiveness of IMF Programs Following the Global Financial Crisis: How Did It Change Since the Asian Crisis?

Carlos de Resende and Shinji Takagi

No 838, ADBI Working Papers from Asian Development Bank Institute

Abstract: We identify the key features of International Monetary Fund (IMF)–supported programs following the 2008 global financial crisis. The statistical analysis of a large sample of countries that borrowed from the IMF during 1997–2013 indicates that, compared to the amount of financing provided to crisis countries during the post-Asian crisis period, the amount was larger on average by more than 3 percentage points of GDP. Yet, the observed magnitude of adjustment in key macroeconomic variables, such as output, the exchange rate, and the current account balance, was just as large, even when the influence of less favorable global economic conditions was controlled for. We argue that the puzzle can be explained, in part, by the large-scale global financial deleveraging, as well as the large initial domestic imbalances observed during the post-global crisis period. The IMF’s post-global crisis programs routinely allowed fiscal balance targets to be relaxed in the face of adverse shocks; some attempted to bail in private investors or accommodated the use of capital and exchange controls to limit capital outflows; and the IMF often collaborated with other donors to boost total official financing. It is reasonable to surmise that, without these innovations, the required macroeconomic adjustments would have been even greater.

Keywords: Asian financial crisis; global financial crisis; IMF programs (search for similar items in EconPapers)
JEL-codes: E65 F33 F53 F55 F62 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-04-30
New Economics Papers: this item is included in nep-knm, nep-mac, nep-opm and nep-sea
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Working Paper: Assessing the Effectiveness of IMF Programs Following the Global Financial Crisis: How Did It Change Since the Asian Crisis? (2018)
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