Publication

This publication assesses the international Monetary Fund’s (IMF) “financial programming” model, which derives monetary and fiscal programs that should achieve macroeconomic targets in countries undergoing crises or receiving debt relief. After first describing the workings of the model, the author goes on to uncover its weaknesses. In conclusion, the publication argues that the financial programming approach is flawed, as it fails to take into account the endogeneity of virtually all the variables in each macroeconomic identity, the instability of its simple behavioral assumptions and the large statistical discrepancies in all the identities.