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IMF Staff Papers Logo    Last updated: September 2005
Volume 52, Number 2
 
IMF Programs and Growth: Is Optimism Defensible?
Reza Baqir, Rodney Ramcharan, and Ratna Sahay

Full Text of this Article (PDF 316K)

Abstract: IMF-supported programs focus on key objectives (such as growth, inflation, and the external current account) and on intermediate policy targets (such as monetary and fiscal policies) needed to achieve these objectives. In this paper, we use a new, large data set, with information on 94 programs between 1989 and 2002, to compare programmed objectives and policy targets to actual outcomes. We report two broad sets of results. First, we find that outcomes typically fell short of expectations in growth and inflation but were broadly in line with the programmed external current account objectives. Similarly, programmed intermediate policy targets were generally more ambitious than the intermediate policy outcomes. Second, focusing on growth, we examine the relationship between objectives and policy targets, and find differences in the way ambitious monetary and fiscal targets affected the achievement of the growth objective. On the one hand, more ambitious fiscal targets, even when they were missed, led to better growth performance. On the other hand, more ambitious monetary targets tended to be associated with lower growth performance.
[JEL F33, F35]