Topic: Contributions on Bayesian methods in economics and finance Title: IMF programs and sensitivity to external shocks: A Bayesian VAR approach Authors:  Mirela Sorina Miescu - Lancaster University (United Kingdom) [presenting]
Abstract: The aim is to assess whether participation into IMF programs significantly diminishes the vulnerability to external shocks. Nowadays, one of the primary purposes of the IMF is to insure global stability, giving advice to member countries on the financial and economic policies that promote stability, help avoiding crises and smooth the adjustment to external shocks. Employing a Bayesian VAR model to obtain a measure for the exposure to external shocks, we close our analysis with an Instrumental Variable approach and we show that participation in the IMF arrangements significantly diminishes the sensitivity to exogenous shocks. Despite the many critics concerning the effects of the IMF loans on the recipient country economy, our results provide evidence that the the Fund is efficient in helping member countries to build a strong economic resilience. These results are of considerable interest in a context where shocks and crises have become a systemic feature of the global economy affecting both developed and developing countries.