IMF programmes must not get too large – Bundesbank paper
Preferred creditor status can lead to large-scale IMF operations crowding out private investors
International Monetary Fund programmes are more likely to change an economy if they do not grow beyond a certain size, a working paper published by the Deutsche Bundesbank argues.
In Doing more with less: the catalytic function of IMF lending and the role of program size, Tobias Krahnk compiles a dataset on IMF programmes from 1990–2018.
IMF programmes generally have positive catalytic effects on recipient economies, Krahnk finds, but this changes once programmes pass a certain size.
Once
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