The effects of IMF programs on income inequality: a semi-parametric treatment effects approach

Chletsos, Michael; Sintos, Andreas

doi:10.1108/IJDI-12-2021-0265

Request a copy

Article (Scientific journals)

The effects of IMF programs on income inequality: a semi-parametric treatment effects approach

Chletsos, Michael; Sintos, Andreas

2022 • In International Journal of Development Issues

Peer reviewed

Permalink
https://hdl.handle.net/10993/52767

DOI
10.1108/IJDI-12-2021-0265

Files (1)Send to Details Statistics Bibliography Similar publications

Files

Full Text

10-1108_IJDI-12-2021-0265.pdf

Publisher postprint (294.92 kB)

Request a copy

All documents in ORBilu are protected by a user license.

Send to

RIS BibTex APA Chicago Permalink X Linkedin

Details

Keywords :

Income inequality; IMF programs; Semi-parametric methods; Treatment effects models

Abstract :

[en] Purpose This paper aims to provide new insights regarding the impact of International Monetary Fund (IMF) programs on income inequality. Design/methodology/approach The paper uses a novel methodological approach proposed by Acemoglu et al. (2019), using (1) the regression adjustment, (2) the inverse probability weighting and (3) the doubly robust estimator, which combines (1) and (2), and a sample of annual data for 135 developing countries over the time period 1970 to 2015. Findings The findings show that IMF programs are associated with greater income inequality for up to five years. By differentiating the effect of IMF programs, the authors find that only IMF non-concessional programs have a significant detrimental effect on income inequality, while IMF concessional programs do not have a consistent effect on income inequality. In addition, the authors find that only IMF programs with a higher number of conditions have a detrimental and statistically significant effect on income inequality, compared to IMF programs with a smaller number of conditions, where their effect on income inequality is found to be insignificant. Originality/value To the best of the authors’ knowledge, the analysis developed in this paper contributes to the existing literature by applying the most methodologically sound identification strategy, which does not rely on the linearity assumption, the selection of instruments or matching variables and additionally takes into account the selection bias related to IMF program participation.

Disciplines :

Business & economic sciences: Multidisciplinary, general & others
Sociology & social sciences
Quantitative methods in economics & management
Macroeconomics & monetary economics
Special economic topics (health, labor, transportation...)

Author, co-author :

Chletsos, Michael ^✱; University of Piraeus > Department of Economics

Sintos, Andreas ^✱; University of Piraeus > Department of Economics

^✱ These authors have contributed equally to this work.

External co-authors :

yes

Language :

English

Title :

The effects of IMF programs on income inequality: a semi-parametric treatment effects approach

Publication date :

2022

Journal title :

International Journal of Development Issues

ISSN :

1446-8956

eISSN :

1758-8553

Publisher :

Emerald Group Publishing, United Kingdom

Peer reviewed :

Peer reviewed

Additional URL :

https://www.emerald.com/insight/content/doi/10.1108/IJDI-12-2021-0265/full/html

Available on ORBilu :

since 15 November 2022

Statistics

Number of views

87 (14 by Unilu)

Number of downloads

0 (0 by Unilu)

More statistics

Scopus citations^®

Scopus citations^®
without self-citations

OpenCitations

Bibliography

Abouharb, M.R. and Cingranelli, D. (2007), Human Rights and Structural Adjustment, Cambridge University Press.
Acemoglu, D., Naidu, S., Restrepo, P. and Robinson, J.A. (2019), “Democracy does cause growth”, Journal of Political Economy, Vol. 127 No. 1, pp. 47-100.
Adam, A. and Tsarsitalidou, S. (2019), “Do sanctions lead to a decline in civil liberties?”, Public Choice, Vol. 180 Nos 3/4, pp. 191-215.
Albanesi, S. (2007), “Inflation and inequality”, Journal of Monetary Economics, Vol. 54 No. 4, pp. 1088-1114.
Angrist, J.D., Jordà, Ò. and Kuersteiner, G.M. (2018), “Semiparametric estimates of monetary policy effects: string theory revisited”, Journal of Business and Economic Statistics, Vol. 36 No. 3, pp. 371-387.
Bal Gunduz, Y. (2016), “The economic impact of short-term IMF engagement in low-income countries”, World Development, Vol. 87, pp. 30-49, doi: 10.1016/j.worlddev.2016.04.012.
Bird, G. (2004), “Growth, poverty and the IMF”, Journal of International Development, Vol. 16 No. 4, pp. 621-636.
Bird, G., Qayum, F. and Rowlands, D. (2021), “The effects of IMF programs on poverty, income inequality and social expenditure in low income countries: an empirical analysis”, Journal of Economic Policy Reform, Vol. 24 No. 2, pp. 170-188.
Blackburn, M.L. (1989), “Interpreting the magnitude of changes in measures of income inequality”, Journal of Econometrics, Vol. 42 No. 1, pp. 21-25.
Blank, R.M. and Blinder, A.S. (1985), “Macroeconomics, income distribution, and poverty”, NBER Working Paper Series, pp. 180-208.
Blanton, R.G., Blanton, S.L. and Peksen, D. (2015), “The impact of IMF and world bank programs on labor rights”, Political Research Quarterly, Vol. 68 No. 2, pp. 324-336.
Blejer, M.I., Leone, A.M., Rabanal, P. and Schwartz, G. (2002), “Inflation targeting in the context of IMF-supported adjustment programs”, IMF Staff Papers, Vol. 49 No. 3, pp. 313-338.
Chletsos, M. and Sintos, A. (2020), “The effects of IMF conditional programs on the unemployment rate”, Available at SSRN 3515996.
Clements, B., Gupta, S. and Nozaki, M. (2013), “What happens to social spending in IMF-supported programmes?”, Applied Economics, Vol. 45 No. 28, pp. 4022-4033.
Copelovitch, M.S. (2010), “Master or servant? Common agency and the political economy of IMF lending”, International Studies Quarterly, Vol. 54 No. 1, pp. 49-77.
Crivelli, E. and Gupta, S. (2016), “Does conditionality in IMF-supported programs promote revenue reform?”, International Tax and Public Finance, Vol. 23 No. 3, pp. 550-579.
Deininger, K. and Squire, L. (1996), “A new data set measuring income inequality”, The World Bank Economic Review, Vol. 10 No. 3, pp. 565-591.
Doepke, M. and Schneider, M. (2006), “Inflation and the redistribution of nominal wealth”, Journal of Political Economy, Vol. 114 No. 6, pp. 1069-1097.
Dreher, A. (2006), “IMF and economic growth: the effects of programs, loans, and compliance with conditionality”, World Development, Vol. 35 No. 5, pp. 769-788.
Easterly, W. (2003), “The effect of IMF and world bank programs on poverty”, in Dooley, M.P. and Frankel, J.A. (Eds), Managing Currency Crises in Emerging Markets, National Bureau of Economic Research Conference Report, The University of Chicago Press, Chicago and London, pp. 361-392.
Easterly, W. and Fischer, S. (2001), “Inflation and the poor”, Journal of Money, Credit and Banking, Vol. 33 No. 2, pp. 160-178.
El-Said, H. and Harrigan, J. (2006), “Globalization, international finance, and political Islam in the Arab world”, The Middle East Journal, Vol. 60 No. 3, pp. 444-466.
Farnsworth, K. and Irving, Z. (2018), “Deciphering the international monetary fund’s (IMFs) position on austerity: incapacity, incoherence and instrumentality”, Global Social Policy, Vol. 18 No. 2, pp. 119-142.
Finnemore, M. and Barnett, M.N. (2004), Rules for the World: international Organizations in Global Politics, Cornell University Press.
Forster, T., Kentikelenis, A.E., Reinsberg, B., Stubbs, T.H. and King, L.P. (2019), “How structural adjustment programs affect inequality: a disaggregated analysis of IMF conditionality, 1980–2014”, Social Science Research, Vol. 80, pp. 83-113.
Galbraith, J.K., Choi, J., Halbach, B., Malinowska, A. and Zhang, W. (2016), “A comparison of major world inequality data sets: LIS, OECD, EU-SILC, WDI, and EHII”, In Income Inequality around the World, Emerald Publishing Limited.
Galbraith, J.K. and Kum, H. (2005), “Estimating the inequality of household incomes: a statistical approach to the creation of a dense and consistent global data set”, Review of Income and Wealth, Vol. 51 No. 1, pp. 115-143.
Garuda, G. (2000), “The distributional effects of IMF programs: a cross-country analysis”, World Development, Vol. 28 No. 6, pp. 1031-1051.
Gunter, B.G., Cohen, M.J. and Lofgren, H. (2005), “Analysing macro‐poverty linkages: an overview”, Development Policy Review, Vol. 23 No. 3, pp. 243-265.
Gupta, S., Plant, M., Clements, B., Dorsey, T., Baldacci, E., Inchauste, G. and Thacker, N. (2002), Is the PRGF Living up to Expectations?, an Assessment of Program Design, International Monetary Fund, Washington, DC.
Hajro, Z. and Joyce, J.P. (2009), “A true test: do IMF programs hurt the poor?”, Applied Economics, Vol. 41 No. 3, pp. 295-306.
Handa, S. and King, D. (1997), “Structural adjustment policies, income distribution and poverty: a review of the Jamaican experience”, World Development, Vol. 25 No. 6, pp. 915-930.
Hartmann, D., Guevara, M.R., Jara-Figueroa, C., Aristarán, M. and Hidalgo, C.A. (2017), “Linking economic complexity, institutions, and income inequality”, World Development, Vol. 93, pp. 75-93.
Herzer, D. and Nunnenkamp, P. (2012), “The effect of foreign aid on income inequality: evidence from panel cointegration”, Structural Change and Economic Dynamics, Vol. 23 No. 3, pp. 245-255.
Herzer, D. and Nunnenkamp, P. (2013), “Inward and outward FDI and income inequality: evidence from Europe”, Review of World Economics, Vol. 149 No. 2, pp. 395-422.
Imbens, G.W. and Wooldridge, J.M. (2009), “Recent developments in the econometrics of program evaluation”, Journal of Economic Literature, Vol. 47 No. 1, pp. 5-86.
IMF (2018), IMF Financial Operations 2018, International Monetary Fund.
Jordà, Ò. (2005), “Estimation and inference of impulse responses by local projections”, American Economic Review, Vol. 95 No. 1, pp. 161-182.
Kanaan, T.H. (Eds). (1997), “Social safety nets: the social development fund in Egypt”, in The Social Effects of Economic Adjustment on Arab Countries, International Monetary Fund.
Kentikelenis, A.E. and Seabrooke, L. (2017), “The politics of world polity: script-writing in international organizations”, American Sociological Review, Vol. 82 No. 5, pp. 1065-1092.
Kentikelenis, A.E., Stubbs, T.H. and King, L.P. (2016), “IMF conditionality and development policy space, 1985–2014”, Review of International Political Economy, Vol. 23 No. 4, pp. 543-582.
Kim, D.H. and Lin, S.C. (2018), “Oil abundance and income inequality”, Environmental and Resource Economics, Vol. 71 No. 4, pp. 825-848.
Kline, P. (2011), “Oaxaca-blinder as a reweighting estimator”, American Economic Review, Vol. 101 No. 3, pp. 532-537.
Lang, V. (2021), “The economics of the democratic deficit: the effect of IMF programs on inequality”, The Review of International Organizations, Vol. 16 No. 3, pp. 599-623.
Lloyd, V. and Weissman, R. (2002), “How international monetary fund and world bank policies undermine labor power and rights”, International Journal of Health Services, Vol. 32 No. 3, pp. 433-442.
Makedonas, E., Bellos, S. and Turan, S. (2015), “IMF lending and poverty in developing countries”, Journal of Heterodox Economics, Vol. 2 No. 2, pp. 113-137.
Martin, R. and Segura-Ubiergo, A. (2005), Social Spending in IMF-Supported Programs, No. 504011, University Library of Munich, Germany.
Nooruddin, I. and Simmons, J.W. (2006), “The politics of hard choices: IMF programs and government spending”, International Organization, Vol. 60 No. 4, pp. 1001-1033.
Nooruddin, I. and Vreeland, J.R. (2010), “The effect of IMF programs on public wages and salaries”, In Global Governance, Poverty and Inequality, Routledge, pp. 122-143.
Oberdabernig, D.A. (2013), “Revisiting the effects of IMF programs on poverty and inequality”, World Development, Vol. 46, pp. 113-142.
Ohanyan, G. and Androniceanu, A. (2017), “Evaluation of IMF programmes on employment in the EU”, Acta Oeconomica, Vol. 67 No. 3, pp. 311-332.
Pastor, M. Jr, (1987), “The effects of IMF programs in the third world: debate and evidence from Latin America”, World Development, Vol. 15 No. 2, pp. 249-262.
Paul, M. and Sharma, P. (2019), “Inflation rate and poverty: does poor become poorer with inflation?”, Available at SSRN 3328539.
Reinsberg, B., Stubbs, T. and Kentikelenis, A. (2021a), “Compliance, defiance, and the dependency trap: International monetary fund program interruptions and their impact on capital markets”, Regulation and Governance,
Reinsberg, B., Stubbs, T. and Kentikelenis, A. (2021b), “Unimplementable by design? Understanding (non‐) compliance with international monetary fund policy conditionality”, Governance.
Rickard, S.J. and Caraway, T.L. (2019), “International demands for austerity: examining the impact of the IMF on the public sector”, The Review of International Organizations, Vol. 14 No. 1, pp. 35-57.
SAPRIN (Structural Adjustment Participatory Review International Network) (2004), “Structural adjustment: the SAPRIN report: the policy roots of economic crisis, poverty, and inequality”, Zed Books, London.
Shandra, J.M., Nobles, J., London, B. and Williamson, J.B. (2004), “Dependency, democracy, and infant mortality: a quantitative, cross-national analysis of less developed countries”, Social Science and Medicine, Vol. 59 No. 2, pp. 321-333.
Shandra, C.L., Shandra, J.M. and London, B. (2012), “The international monetary fund, structural adjustment, and infant mortality: a cross-national analysis of Sub-Saharan Africa”, Journal of Poverty, Vol. 16 No. 2, pp. 194-219.
Solt, F. (2016), “The standardized world income inequality database”, Social Science Quarterly, Vol. 97 No. 5, pp. 1267-1281.
Steinwand, M.C. and Stone, R.W. (2008), “The international monetary fund: a review of the recent evidence”, The Review of International Organizations, Vol. 3 No. 2, pp. 123-149.
Stone, R.W. (2011), Controlling Institutions: International Organizations and the Global Economy, Cambridge University Press.
Stubbs, T. and Kentikelenis, A. (2018), “Targeted social safeguards in the age of universal social protection: the IMF and health systems of low-income countries”, Critical Public Health, Vol. 28 No. 2, pp. 132-139.
Stubbs, T., Kentikelenis, A., Ray, R. and Gallagher, K.P. (2021), “Poverty, inequality, and the international monetary fund: how austerity hurts the poor and widens inequality”, Journal of Globalization and Development.
Thomson, M., Kentikelenis, A. and Stubbs, T. (2017), “Structural adjustment programmes adversely affect vulnerable populations: a systematic-narrative review of their effect on child and maternal health”, Public Health Reviews, Vol. 38 No. 1, pp. 1-18.
Vaubel, R. (1996), “Bureaucracy at the IMF and the world bank: a comparison of the evidence”, The World Economy, Vol. 19 No. 2, pp. 195-210.
Vreeland, J.R. (2002), “The effect of IMF programs on labor”, World Development, Vol. 30 No. 1, pp. 121-139.
Wouters, J. and De Man, P. (2011), International Organizations as Law-Makers. In Research Handbook on the Law of International Organizations, Edward Elgar Publishing.