Does international investor sentiment improve when a crises-ridden country participates in an International Monetary Fund (IMF) program? I argue that merely participating in an IMF program may not revive the sentiments of investors. Rather, investor sentiment would improve when governments enhance the credibility of their commitment to reforms by accepting severe conditions imposed by the IMF, which incur ex ante and ex post political costs. Using panel data on 166 countries during the 1992–2013 period (twenty-two years), I find that countries participating in IMF programs, with conditions attached, specifically prior actions and performance criteria conditions, after controlling for endogeneity concerns using exogeneous instruments, are associated with an increase in long-term investor sentiment. These results are robust to using alternative data, variables and estimation methods. My findings are in stark contrast to those who argue that IMF conditional programs are akin to swallowing a bitter pill. In fact, my results demonstrate that the so-called bitter pill may act as a palliative.

中文翻译：

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国际货币基金组织的计划设计能否重振投资者情绪？实证调查

当一个危机四伏的国家参与国际货币基金组织 (IMF) 计划时，国际投资者情绪是否会有所改善？我认为，仅仅参与 IMF 项目可能不会重振投资者的情绪。相反，当政府通过接受国际货币基金组织施加的严厉条件来增强其改革承诺的可信度时，投资者情绪将会改善，这会产生事前和事后的政治成本。使用 1992 年至 2013 年期间（22 年）期间 166 个国家的面板数据，我发现在使用外生工具控制内生性问题后，参与 IMF 计划的国家在附加条件，特别是先前的行动和绩效标准条件下，是与长期投资者情绪的增加有关。这些结果对于使用替代数据是稳健的，变量和估计方法。我的发现与那些认为国际货币基金组织有条件的计划类似于吞下苦药的人形成鲜明对比。事实上，我的研究结果表明，所谓的苦药可以起到缓解作用。