COVID-19 has thrust the International Monetary Fund (IMF) to center stage as the world struggles to handle the global economic consequences from the pandemic.
That wasn't always the case.
\”Just fifteen years ago some powerful and influential people were writing from the Fund as irrelevant, ineffective, and obsolete,\” said Graham Bird, an economics professor, co-director of the university's Claremont Institute for Economic Policy Studies (CIEPS), and a widely-acknowledged leading expert around the IMF. \”The world economy was doing pretty much overall and also the question was being raised why the planet needed an international troubleshooter when there didn't appear to be much trouble.\”
That duration of apparent tranquility was shattered by the 2008-09 global economic and financial crisis and today by the COVID-19 crisis. By mid-September, the IMF was lending to a lot more than 80 countries, with another 30 negotiating IMF programs.
The IMF’s crucial role within the global pandemic has silenced the dismissive voices of some critics.
But do you know the effects of IMF programs, particularly on economic growth, poverty, and income inequality? Do they help or hinder economic development?
The conventional wisdom continues to be that \”austerity programs\” from the IMF retard economic growth in poor countries.
Work conducted by Bird, together with CIEPS research associate Dane Rowlands, and published in the Journal of Development Studies, has challenged that assertion. They've showed that IMF programs often helped to achieve growth, or at best didn't adversely affect it.
Other recent research undertaken by Bird and Rowlands, in collaboration with doctoral student and Fulbright Scholar Faryal Qayam (now Assistant Professor of Economics in the University of Science in Islamabad, Pakistan), continues to be published within the Journal of monetary Policy Reform. It uses a propensity score matching method to cope with the issue of selection bias that often affects tries to estimate the impact of IMF programs.
That recent studies have shown that, when allowance is made for other contingent factors, IMF programs in low-income countries have not had the adverse effects on poverty, inequality, and social expenditure that have often been claimed.
Their results were presented last summer throughout a meeting of the Fund's Independent Evaluation Office in Washington, DC.
\”Our results piqued a great deal of interest,\” Bird said. He added it's \”good to see collaborative research with this excellent doctoral students leading to publications in respected international journals and having an impact on the style of policy that affects many millions of individuals worldwide.\”