|Title:||Impact of IMF Assistance on Economic Growth Revisited|
Vol. 8, No 3, 2015
Published date: 20-10-2015 (print) / 20-10-2015 (online)
Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
|Keywords:||IMF; economic growth; endogeneity; instrumental variables|
|JEL classification:||O11, F33|
We investigate the effect of IMF assistance on economic growth in a broad panel of countries. We argue that countries are likely self-select into seeking IMF involvement based on their economic performance. We control for such endogeneity by means of instrumental variables. Our findings indicate that the contemporaneous effect of the IMF involvement is insignificant while the lagged effect is positive. The 2SLS effect is larger than the OLS one, indicating that the latter is downward biased.