Macroeconomic Policies and Participation in IMF Programs

Abstract

This paper poses the question whether and to what extent developing countries' macroeconomic policies affect their participation in IMF programs. The data contain 91 developing countries that received four types of IMF programs during the period 1967-1996. Using survival analysis and generalized least squares, we examine the characteristics of interprogram years (years without any IMF program). The results suggest that the average number of years that countries spend without an IMF program is affected by their macroeconomic policies and exchange rate regimes. Policy combinations that prevent the reduction in reserves lengthen the average interprogram period.

Keywords: The International Monetary Fund, Balance of payments crisis, Exchange rate regimes, Moral hazard

JEL Classification: C34, E63, F32, F33