The Intervention Paradox: A Study of the Effects of International Monetary Fund Intervention on Ineq

Summary: "This presentation seeks to analyze the impact that International Monetary Fund (IMF) policy prescriptions have had on income inequality after the 1997 Asian Financial Crisis (AFC). The consensus in the academic literature is that the IMF's intervention in crisis-hit countries widens the distribution of income. This theory's validity in the AFC context will be tested using the Difference-in-Difference methodology. According to my empirical results, inequality falls, at least in the medium-term, after the implementation of IMF policies in East and Southeast Asian economies. During this presentation, I will strive to resolve this research puzzle by arguing that strong opposition to the IMF's policy prescriptions in countries like South Korea and Thailand prompted governments to introduce far-reaching labour market social safety nets. These measures have improved distributional outcomes and redressed widening disparities in the medium to long-run".


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