The political economy of IMF forecasts

Axel Dreher, Silvia Marchesi, James Raymond Vreeland

Research output: Contribution to journalArticlepeer-review

39 Scopus citations

Abstract

We investigate the political economy of IMF forecasts with data for 157 countries (1999-2005). Generally, we find evidence of forecast bias in growth and inflation. Specifically, we find that countries voting with the United States in the UN General Assembly receive lower inflation forecasts as domestic elections approach. Countries with large loans outstanding from the IMF also receive lower inflation forecasts, suggesting that the IMF engages in "defensive forecasting." Finally, countries with fixed exchange rate regimes receive lower inflation forecasts, suggesting the IMF desires to preserve stability as inflation can have detrimental effects under such an exchange rate regime.

Original languageEnglish (US)
Pages (from-to)145-171
Number of pages27
JournalPublic Choice
Volume137
Issue number1-2
DOIs
StatePublished - Oct 2008

All Science Journal Classification (ASJC) codes

  • Sociology and Political Science
  • Economics and Econometrics

Keywords

  • Economic forecasts
  • IMF
  • Political influence

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