The Effects of IMF Conditional Programs on the Unemployment Rate

Abstract

Investigating how lending conditional programs of the International Monetary Fund (IMF) affect the unemployment rate. We apply four different empirical approaches accounting for the selection bias issue using a panel of 96 countries for the period of 1971-2015. We find that IMF loan programs have detrimental effects on the unemployment rate. Our results remain robust across alternative specifications and using alternative measures of IMF arrangements. There is evidence that significant short-run effects hold robust in the long-run. Lastly, our results indicate that the conditions – policy reforms included within the program increases the unemployment rate.