Abstract
This paper analyzes the effects of International Monetary Fund (IMF) arrangements on the timing of inflation stabilization programs. By providing financial support that may allow the reduction of inflation without incurring politically unacceptable economic costs, the IMF can hasten stabilization. But, since support can also reduce the costs of inflation, it may instead delay it. Empirical results obtained for 10 countries that suffered from chronic inflation fail to support the hypothesis that IMF financial assistance accelerates stabilization. Rather, they indicate that other factors have a greater impact on the timing of stabilizations: greater fragmentation of the political system delays stabilization, while a higher level of inflation hastens it.
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JEL Classification Numbers: E63, E31, F35
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Joséveiga, F. Does IMF Support Accelerate Inflation Stabilization?. Open Econ Rev 16, 321–340 (2005). https://doi.org/10.1007/s11079-005-4738-0
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DOI: https://doi.org/10.1007/s11079-005-4738-0