Macroeconomic Effects of IMF Stabilization Programs: Evidence from Jordan

Abstract

This study aims to analyze  the effectiveness of the economic reform programs of the IMF on  the economic growth in Jordan. This study surveys the evidence yielded by the more recent cross-country studies, paying special attention to the respective empirical methodologies employed. The Generalized Evaluation Estimator (GEE) technique is used evaluate the effectiveness of the IMF on four target variables: real GDP growth, the current account balance, inflation, and unemployment. The empirical model also accounts for two sets of variables. The first set consists of other policy variables that might have been adopted in the absence of IMF programs,  while the second set consists of some external exogenous variables, in order to isolate the effect of IMF funded programs. The findings showed that IMF programs in Jordan appear to be ineffective, except for the current account balance. However, this effectiveness may be determined by many factors, including the nature of the programs, the compatibility of programs with country public policies, and external shocks.