The Effects of IMF on Income Inequality: A Semi-Parametric Treatment Effects Approach

Abstract

In this paper, we examine the effect of IMF (imposed) programs on countries income inequality for the period 1963-2015. To deal with selection bias, we use a potential outcomes framework, which does not rely on the selection of matching variables and has the further advantage of uncovering the effect of the treatment on the outcome variable over time. Our results indicate an increase in income inequality. The effect of some targeted IMF programs shows no significant evidence on income inequality, supporting the view of a new policy strategy designed to mitigate this disturbing trend.