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- Publisher
- World Scientific Publishing Company
- Copyright
- Copyright ©
- ISSN
- 1793-9933
- eISSN
- 1793-9941
- DOI
- 10.1142/S1793993313500038
- Publisher site
- See Article on Publisher Site
Abstract
This paper analyses the effect of IMF-supported programs on economic agents' sentiment in transition countries. Using multinomial ordered probit models, we find that IMF-supported programs during periods of economic collapse reinforce underlying sentiments; they strengthen confidence in the future for those with an optimistic outlook and weaken sentiments for those with a weak outlook. This reflects the "confirmation bias", a tendency for individuals to prefer information that confirms their preconceptions. Once recovery is underway, IMF arrangements cease to be consequential for the outlook, implying that the biggest impact on sentiments occur during periods of great uncertainty and not during minor shocks.
Journal
Journal of International Commerce, Economics and Policy – World Scientific Publishing Company
Published: Feb 1, 2013
Keywords: Transition structural adjustment international monetary fund confirmation bias