Jan Fidrmuc

Department of Economics and Finance and Centre for Economic Development and Institutions (CEDI),

Brunel University, London, United Kingdom,

E-mails:

Jan.Fidrmuc@brunel.ac.uk, jan@fidrmuc.net

IMPACT OF IMF ASSISTANCE

ON ECONOMIC GROWTH REVISITED

Stefani Kostagianni

Department of Economics and Finance and Centre for Economic Development and Institutions (CEDI),

Brunel University, London, United Kingdom,

E-mail:

stefani.kostagianni@brunel.ac.uk

Abstract. 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.

Received: June, 2015

1st Revision: July, 2015

Accepted: September, 2015

DOI: 10.14254/2071- 789X.2015/8-3/2

JEL Classification: O11, F33

Keywords: IMF;  economic  growth;  endogeneity;  instrumental variables.