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The IMF in Ecuador: an analysis

Rivera Jiménez, Joel
(2021)

Files

JoelRivera777618002021.pdf
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Details

Supervisors
Pensieroso, Luca
Faculty
Faculté des sciences économiques, sociales, politiques et de communication
Degree label
Master [120] en sciences économiques, orientation générale, à finalité approfondie
Abstract
This paper analyses the fiscal policy adjustments required by the IMF in Ecuador following the October 2020 Extended Fund Facility (EFF) arrangement. Using a small open economy model calibrated for the ecuadorian economy, I study whether such agreements are beneficial in terms of economic recovery and welfare. The main finding is that the procyclical taxation and debt adjustments required by the IMF program, are beneficial only if followed by a strong countercyclical public expenditure policy. This imply that an implementation of the IMF program in its integrity would be detrimental for the economy. Also, this modified program is the best policy adjustment possible in terms of output recovery and long run welfare.