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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26174
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| Title: | | The politics of IMF forecasts  |
| Authors: | | Dreher, Axel Marchesi, Silvia Vreeland, James Raymond |
| Issue Date: | | 2007 |
| Series/Report no.: | | CESifo working paper 2129 |
| Abstract: | | Using panel data for 157 countries over the period 1999-2005 we empirically investigate the politics involved in IMF economic forecasts. We find a systematic bias in growth and inflation forecasts. Our results indicate that countries voting in line with the US in the UN General Assembly receive lower inflation forecasts. As the US is the Funds major shareholder, this result supports the hypothesis that the Funds forecasts are not purely based on economic considerations. We further find inflation forecasts are systematically biased downwards for countries with greater IMF loans outstanding relative to GDP, indicating that the IMF engages in defensive forecasting. Countries with a fixed exchange rate regime also receive low inflation forecasts. Considering the detrimental effects that inflation can have under such an exchange rate regime, we consider this evidence consistent with the Funds desire to preserve economic stability. |
| Subjects: | | IMF economic forecasts political influence |
| JEL: | | C23 D72 F33 F34 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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