The IMF impact on economic and socio-economic indicators

: trend analysis

Abstract

The International Monetary Fund (IMF or the Fund) was created in 1945 in order to ensure the stability of exchange rates and rebuild the international monetary system. It was a post-war effort to "win the peace" (Vries, 1986). Today, its purpose is to ensure financial stability, promote international trade, job creation, sustainable economic development and poverty reduction (IMF, 2013). Our goal is to determine whether the IMF is fulfilling its purpose through the analysis of correlations between the IMF lending arrangements and a set of indicators. Our methodology involves the construction of correlation matrices within a group of 53 Upper-Middle income and High income countries with IMF loans approved between 1983 and 2012. The results of this study, based on the information available, show that for the correlations observed between IMF lending arrangements and the socio-economic and economic indicators selected are mostly small or unsubstantial. However, in the recent IMF interventions in Europe (Portugal, Greece and Ireland), our results after program approval point to a positive influence in the Current Account Balance indicator, an a negative influence in Gross Domestic Product Growth and Unemployment, reflecting the resolution of the Current Account Balance imbalances at the expense of a decline in GDP Growth and an increase in the Unemployment Rate.

Date of Award	8 Jul 2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Francisca Guedes de Oliveira (Supervisor)