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The Episodic and Unpredictable Nature of IMF Lending: An Empirical Analysis
Author(s) -
Bird Graham,
Rowlands Dane
Publication year - 2010
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2010.01289.x
Subject(s) - bivariate analysis , economics , volatility (finance) , anticipation (artificial intelligence) , monetary economics , macroeconomics , econometrics , statistics , mathematics , artificial intelligence , computer science
Having had excess lending capacity at the beginning of 2008, by the end of the year International Monetary Fund (IMF) lending had increased and, in anticipation of a further increase in the demand for Fund assistance, arguments were being put forward for a substantial increase in IMF resources. Analysis of IMF lending over a protracted period of time reveals considerable volatility. Using both bivariate and multiple regression estimation, this paper investigates the determinants of IMF lending and examines the extent to which it is predictable. Although some significant relationships are discovered, many of them are unstable and time variant. This makes it difficult to predict IMF lending with any degree of confidence. The paper goes on to examine briefly the policy implications of unpredictability. It is critical of the ways in which the problem has been handled in the past and it offers what it argues is a preferable solution.