February 2005
William Easterly
Journal of Development Economics, Vol. 76, No. 1, 1-22.

What did structural adjustment adjust? The association of policies and growth with repeated IMF and World Bank adjustment loans.
Analysis of adjustment loans often overlooks their repetition to the same country. Repetition 10 changes the nature of the selection problem. None of the top 20 recipients of repeated adjustment 11 lending over 1980–99 were able to achieve reasonable growth and contain all policy distortions. 12 About half of the adjustment loan recipients show severe macroeconomic distortions regardless of 13 cumulative adjustment loans. Probit regressions for an extreme macroeconomic imbalance indicator 14 and its components fail to show robust effects of adjustment lending or time spent under IMF 15 programs. An instrumental variables regression for estimating the causal effect of repeated 16 adjustment lending on policies fails to show any positive effect on policies or growth.