International Monetary Fund

International Monetary Fund

Key Term: International Monetary Fund

An organization set up in 1944 to lower trade barriers between countries and to stabilize currencies by monitoring the foreign exchange systems of member countries, and lending money to developing nations

Review

A review of recent quantitative studies on the International Monetary Fund reveals that much of the conventional wisdom is incorrect. Recent studies have demonstrated a new degree of methodological rigor, have drawn more heavily upon insights from political science, and have asked a number of new questions. We review studies of participation in IMF programs, design of IMF conditionality, implementation and enforcement of IMF conditions, conventional program effects and catalytic effects. At every stage, we find substantial evidence of the influence of major IMF shareholders, of the Fund's own organizational imperatives, and of domestic politics within borrowing countries. We conclude that very little is known with certainty about the effects of IMF lending, but that a great deal has been learned about the mechanics of IMF programs that will have to be taken into account in order to obtain unbiased estimates of those effects.

The last two decades have witnessed a profound acceleration of international transactions. The collapse of Communism and the increased salience of global capital flows propelled the International Monetary Fund (IMF, or the Fund) to undertake much wider and more profound interventions in global domestic politics. By the mid-1990s it was possible to speak of a “Washington Consensus,” a set of policies leading to liberalized trade and financial flows, privatization, and deregulation that were embraced by the advanced industrial countries, promoted by the Fund in cooperation with other international financial and trade institutions, and increasingly implemented in the developing world (Williamson, 1997). This consensus is now widely criticized in the aftermath of the Asian financial crisis of 1997. Latin American incomes ...