external evaluation of imf economic research activities ...part 2 report of the external evaluation...

Part 2

Report of the External EvaluationCommittee on the IMF’s

Economic Research Activities

ContentsCommittee Members 9

Executive Summary and Recommendations 10I. Introduction 13

Objectives of the Evaluation 13How the Evaluation Was Conducted 13Structure of the Report 14Research and the Wider Environment of the Fund 14

II. The Role of Research 15What Is Research and Why Is It Needed at the Fund? 15Nature and Organization of Economic Research in the Fund 17

III. The Committee’s Evaluation of Research Activities 18Evaluation of Research Output 18Evaluation of Inputs and the Research Process 22

IV. Recommendations for Change 34Key Recommendations 34Supplementary Recommendations 39

Annexes

I. Terms of Reference 44II. Nature and Organization of Economic Research in the Fund 46III. The Review Process 60IV. IMF Organizational Chart 62V. Glossary 63

Bibliography (Selected) 66

PART 2. REPORT OF THE EXTERNAL EVALUATION COMMITTEE

Boxes1. Case Study of Research on Inflation Targeting 202. The Fund’s Performance Assessment and Rating System 28

Tables

1. Research Products of the IMF by Country Specificity, 1995–98 522. Research Products of the IMF by Type of Country, 1995–98 523. Research Products of the IMF by Department, 1995–98 534. Research Products of the IMF by Research Topic, 1995–98 535. Research Products of the IMF by Document Type and Department, 1995–98 546. Comparison of Citations of Staff Papers, Brookings Papers on Economic

Activity, and World Bank Economic Review (Citations of 1991 and 1995 Articles) 547. Comparison of Journals Citing Staff Papers, Brookings Papers on Economic Activity,

and World Bank Economic Review (Citations of 1991 and 1995 Articles) 558a. 1971–99 Citations of Staff Papers Articles Published in Selected Years (Excluding

Citations in Staff Papers) 588b. 1971–97 Comparison of Total Citations (Over Selected Time Periods) of Staff Papers

Articles Published in Selected Years (Excluding Citations in Staff Papers) 59

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Committee Members

Committee Members

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Frederic S. Mishkin (Chairman) A Barton Hepburn Professor of Economics, Gradu-ate School of Business, Columbia University,United States

Francesco Giavazzi Professor of Economics, Department of Economics,Bocconi University, Italy

T.N. Srinivasan Samuel C. Park, Jr. Professor of Economics andChairman, Department of Economics, Yale Uni-versity, United States

Note: Johanna Honeyfield, Special Projects Officer, served as the coordinator of this committee. She was much more than a coordinatorof the committee: but for her efficiency, energy, enthusiasm, and intimate knowledge of the Fund as an organization, we would not havebeen able to complete our report successfully and in time. We thank her for her extraordinary work going above and beyond the call of duty.We also thank Michael Vaney for his research assistance. Finally, we thank the Director and staff of the Office of Internal Audit and In-spection, in particular Elena Frolia.

Executive Summary and Recommendations

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Research is critical to the Fund’s successful opera-tion because it provides the analytical foundations

for the work of the institution. Without it, the Fund’sviews and advice would lack credibility. The contribu-tion of research to the work of the Fund depends onensuring that research is relevant, of high quality, anddisseminated effectively. Our evaluation finds thatthere is room for improvement on these dimensions.

Specifically, we find the following.

• Although the Fund produces some excellentresearch products, there is substantial roomfor improvement in the overall quality of theFund’s research.

• The mix of research conducted at the Fundneeds to be directed more to areas where itcan add the most value.

• Research in functional departments needs tobe integrated to a greater extent into opera-tional work.

• Fund researchers do not have the visible profilein the outside world that they had in the past.

To determine the factors that lie behind these con-clusions, we examine five basic issues central to theresearch process:

• organizational structure;

• culture;

• incentives and accountability;

• resource allocation; and

• dissemination.

We find room for improvements on a number offronts and we make a set of recommendations toachieve these improvements. The recommendationsfocus on setting priorities for research activities inthe Fund and improving incentives and accountabil-ity in the research process. Most of the recommenda-tions directly address research activities. However,we believe that it is also important to improve as-pects of the wider environment that have an impor-tant influence on incentives and resources for re-search. To this end, we make two recommendationsof a more general nature.

Our recommendations are grouped into two sets:this first set consists of 9 key recommendations,followed by a second set of 13 supplementary recommendations.

Key Recommendations

In our evaluation of the research process, wefound room for improvement in the following areas:

• the value attributed to research in the day-to-day priorities of the Fund;

• the amount of time allocated to conduct high-quality research;

• the coordination of research and overall re-search strategy and priorities;

• the mix of research;

• communication between departments regard-ing their research activities;

• incentives to conduct high-quality research;

• openness to the outside world;

• the choice of visiting scholars; and

• the allocation of resources for hiring consultants.

The following three recommendations, whichfocus on allocation of the Fund’s scarce resources,address the issues identified above.

1. Create a Committee on Research Priorities toassist in strategic planning and to support re-search activities.This committee should identify research prior-

ities for the Fund. It should also provide resourcesto research projects it selects from those submittedto it and make Fund-wide decisions on invitingvisiting scholars and hiring outside consultants.

2. Introduce explicit departmental targets forstaff time allocated to research activities.

Each department should be required to setaside a share of its staff time for research andmake this explicit in its budget.


Executive Summary and Recommendations

3. Shift the mix of research toward topics thatadd most value.Within its mandate, the Fund should shift more

of its research efforts toward developing and tran-sition economy, cross-country, and financial sec-tor research.

The following could also be improved:

• collaboration between departments;

• incentives for researchers to be involved inthe policy development process;

• accountability of staff involved in researchwork.

The three recommendations that follow addressthese issues, and those mentioned earlier, by makingimprovements to various aspects of the Fund’s in-centive structure.

4. Create incentives to improve collaboration be-tween departments and to encourage re-searchers to contribute to policy work.Research staff should receive credit in their an-

nual performance reviews for providing valuableservice to other departments, based on input fromthese departments. Requests for assistance onmajor policy development projects and missionwork should be advertised on the Fund’s internalwebsite.

5. Improve the assessment of research quality inthe annual performance evaluation system.The performance assessment for research staff

should be based more systematically than at pre-sent on a serious assessment of the quality, and notmerely the number, of research papers produced.

6. Give all staff, no matter how junior, opportu-nities to present their research products tomanagement and the Executive Board.The Fund should adopt a convention that the

primary author or authors of a research productshould always be the ones who present it to Man-agement or the Executive Board (unless they optnot to do so).

The culture in the Research Department must besupportive of research.

The following recommendation focuses on the roleof the Director of the Research Department in foster-ing a culture that supports research and engages thedepartment in the policy development process:

7. Give a clear mandate to the Director of the Re-search Department to be both an active re-search leader and economic counselor to theFund.A Director of Research should be actively en-

gaged in the research process, as well as being a

source of independent advice to the Fund on pol-icy issues.There is a need to improve accountability in gen-

eral and make better use of resources. These issueshave important effects on the resources and incen-tives for research activities but also affect the organi-zation as a whole.

The following recommendations, of high prioritybut of a more general nature, address these issues.

8. Create a more effective performance evalua-tion system.The performance evaluation system should be

changed to discriminate more effectively betweenhigh and low performers and to encourage poorperformers to leave the organization, with a seri-ous threat of termination.

9. Consider how to reduce unnecessary internalreview of Fund work and avoid formal writ-ten comments where informal communica-tion would be adequate.As part of an evaluation of the review process,

the Fund should consider changes that allow reviewto take place at an earlier stage of the document de-velopment process, make communication more in-formal, and reduce the amount of reviewing.

Supplementary Recommendations

Recommendations 10 to 14 address issues relat-ing to the Fund’s culture, incentive structure, andaccountability.

10. Encourage participation in relevant externalconferences.

As a departmental objective, each departmentshould explicitly set aside time for their staff toparticipate in external conferences of relevance tothe Fund, and ensure that presentations by staff atrelevant conferences are rewarded.

11. Put only the names of significant contribu-tors on Fund publications.

Only the names of individuals who have madea significant contribution to the research shouldappear as authors on Fund publications, and thereshould be no presumption that senior staff shouldbe listed first on coauthored publications simplybecause of their seniority.

12. Improve collaboration between World Bankand Fund researchers.

A joint weekly (or biweekly) research seminar,and possibly an annual conference, should be estab-lished by the Research Department in conjunctionwith the appropriate counterparts in the WorldBank.

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13. Introduce more flexibility into the hiringprocedures for entry-level economists.

Economist Program candidates should includethose with strong research interests. The Fundshould, at the outset, assure some good candidatesa place in the Research Department (contingentupon their successful completion of the two-yearEconomist Program). Candidates with strong re-search interests should be required to present theirresearch at a seminar and the opinions of activeresearchers should be taken into account in thehiring decision.

14. Consider streamlining the managementstructure in the Research Department.The Research Department should consider

adopting a less hierarchical structure as a meansof increasing collegiality in the Department, en-hancing intellectual exchanges and making effi -ciency gains.

Recommendations 15 to 18 address issues relatingto dissemination of research both within and outsidethe organization.

15. Write and disseminate nontechnical sum-maries of highest quality and most relevantresearch.Selected research papers with interesting

and/or relevant conclusions should be summa-rized for nontechnical audiences and be dissemi-nated throughout the Fund.

16. Treat working papers as preliminary.Working Papers should no longer be authorized

for distribution by Front Offices or division chiefsand should have the following phrase added to thecurrent disclaimer: “This Working Paper is prelimi-nary and is for discussion purposes only.”

17. Create a new vehicle for non-senior staff tomake presentations to Management and theExecutive Board.Periodically, perhaps four times a year, staff

should make presentations of their research

work in an informal meeting of the ExecutiveBoard.

18. Improve dissemination of research to non-technical audiences outside the Fund.The Fund should review its overall dissemina-

tion strategy, consider publication vehicles thathave been successful in other public policy insti-tutions and encourage greater researcher involve-ment in some nontechnical publications.

Recommendation 19 addresses an issue relating toresource allocation in the Fund.

19. Increase the number of research assistantsrelative to economists.The Fund should substantially increase the

overall number of research assistants, and hiremore of them on fixed-term, nonrenewable contracts.

Recommendations 20 to 22 address issues relatingto the culture of openness to the outside world.

20. Create an ongoing external review processfor research products.On a periodic basis, the Fund should contract

with outside experts to read and comment on theindividual products of the research projects thathave been approved by the Committee on Re-search Priorities.

21. Monitor progress on implementing the rec-ommendations in this report.To ensure the effective implementation of the

recommendations in this report that are approvedby the Executive Board, the Board should requireManagement to submit a follow-up report on im-plementation one year from the date of discussionof this report.

22. Create periodic, general, external reviews ofresearch activities.The Executive Board should commit to peri-

odic external reviews of research activities at in-tervals of no more than five years.

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Objectives of the Evaluation

1. This evaluation of the International MonetaryFund’s economic research activities was commis-sioned by the IMF’s Executive Board. The evalua-tion is one of a series of external evaluations look-ing at different aspects of the Fund’s operations.

2. The purpose of the evaluation, as stated in theTerms of Reference, is to

assess whether economic research in the IMFcontributes successfully to the achievement of theFund’s objectives. For this purpose, the evalua-tion will assess the appropriateness of the presentscale and organization of research activities, theway in which the level of resources are chosen,and how they relate to the overall work of theFund. The evaluation will also seek to assess thequality and the added value of different aspects ofthe Fund’s economic research and to appraise itsutility in the Fund among its member countries,and within the wider economics community.

3. Our committee of external consultants wasgiven a six-month timeframe, with total resources ofsix person-months and a limited travel budget, inwhich to make an assessment. In making that assess-ment, we have considered the following broad, inter-related questions:

• What is the definition of economic researchin the context of the Fund?

• Why does the Fund need research and whatare the Fund’s research needs?

• What is the present scale of research in theFund?

• Is the Fund doing the right amount, type andmix of research to best meet its needs?

• Is research organized in the most effectiveway?

• Is the research of high quality?

• Is the research presented and disseminated ef-fectively to the right audiences?

4. The full Terms of Reference for the evaluationare attached as Annex I to this report.

How the Evaluation Was Conducted

5. The Committee interviewed a wide range ofpeople, both inside and outside the Fund, to canvasstheir opinions on Fund research.

6. Within the Fund, the Committee interviewedabout 100 people:

• 2 members of management;

• 15 Executive Directors;

• 36 A-level economist staff and 40 B-levelstaff (including all Department Directors)from the following departments: African,Asia and Pacific, European I, European II,Fiscal Affairs, IMF Institute, Middle Eastern,Monetary and Exchange Affairs, Policy De-velopment and Review, Research, Statistics,and Western Hemisphere.

7. We also interviewed several staff in the Admin-istration and External Relations Departments. Weactively sought interviews with a number of the peo-ple we interviewed. However, we also circulated anopen invitation to all members of the departmentsmentioned above to meet with us if they wished to.

8. Outside the Fund, we spoke to 86 people. Ofthese:

• 15 are former Fund staff (5 are now in acade-mia, 4 are now in policymaking capacities innational governments, 3 are now in the pri-vate financial sector, 2 are retired, and 1works in a policy institute);

• 30 are national policymakers (in 12 countriesin Europe, Asia, North and South America);

• 5 work at the World Bank;

• 17 are in academia (many with some prior orcurrent link to the Fund or the World Bank);

• 10 work in policy institutes;

• 3 work in the private sector; and

Section I Introduction

13

Introduction


• 6 work in other international financial institutions.

9. Given limited time and budget for travel, wecould not realistically interview all potential pro-ducers and users of Fund research. However, ourinterviewees are large in number and cover a widespectrum of all interests inside and outside theFund.

10. We also collated a list of the Fund’s researchoutput in the last four years (1995–98) and reviewedsamples of the output for quality and relevance. Thisprocess is described in greater detail in the begin-ning of Section III.

11. We are grateful to all those we interviewed fortheir insights, and to Fund staff in support functionswho provided us with background information, data,and other Fund records.

Structure of the Report

12. We begin in Section II by articulating our viewof the role of research in the Fund. We first define re-search in the context of the Fund, then consider whyresearch is important for the Fund. The details of howresearch is organized are found in Annex II.

13. Section III contains our evaluation of the ef-fectiveness of research activities in helping theFund to meet its objectives. We outline what we ex-pected to see in the research operations of an orga-nization such as the Fund, and assess the extent towhich the Fund’s research operations meet our expectations.

14. Section IVcontains our recommendations forimprovement in the way research is organized, andoperates. These recommendations are designed toensure that the Fund’s research activities providesupport for its operations and policy advice, therebyputting the Fund in a strong position to advocateand defend its advice and views to relevant externalparties. The recommendations fall into two sets.The first set contains nine key, high-priority recom-mendations. The second set supplements and rein-forces the nine key recommendations.

Research and the Wider Environmentof the Fund

15. In any evaluation of a part of an organization’sfunctions, it is also necessary to consider how thatpart interacts with the rest of the organization. Inevaluating research in the Fund, it is particularlynecessary to consider the way the whole organiza-tion works because

• research is not simply an output per se, it isalso an essential input into other parts of theFund’s operations (lending, advising on pol-icy, etc.); and

• research in the Fund is done throughout theorganization, not only in the Research De-partment (although the type of research andthe amount of time devoted to research variessignificantly across the Fund).

16. Many of the issues that have important effectson the environment and incentives for research alsoaffect other activities in the organization. We havetherefore viewed the Terms of Reference for this re-port broadly, to include issues that affect other as-pects of the way the organization operates as well asresearch.

17. We are also aware that in reviewing re-search—a specific activity of the Fund—we run therisk of failing to consider the trade-offs betweenthe needs of research and the needs of other activi-ties in the Fund. Research is extremely important tothe Fund. However, we recognize that trade-offshave to be made between effort devoted to researchand to other activities. These trade-offs are bestmade within the framework of an overall strategicplan for the institution, which would also set the broader framework for deciding on researchpriorities.

18. While the scope of our review necessarilymust be limited to research activities, we believe itshould feed into a wider strategic planning processso as to allocate sufficient resources for research ac-tivities and to determine where to concentrate re-search effort.

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What Is Research and Why Is ItNeeded at the Fund?

Definition in the Context of the Fund

19. Research can mean different things to differ-ent people. Our terms of reference note that “theboundaries between research and operational workare not clear-cut, since much of the staff ’s regularwork on surveillance and the use of Fund resourcesinvolves elements of research.” In other words, re-search in the Fund is, in many cases, an intermediateinput into many of the Fund’s other activities.

20. Recognizing this, in the context of the Fund,we define research widely as the set of activities thatprovide an analytical foundation for the Fund’s oper-ations. These activities might involve either devel-oping new or improved theoretical and empiricalframeworks and databases or making use of existingframeworks to provide an analytical basis for deci-sion making and policy advice. Research, in what-ever form it takes, should be thought of as an invest-ment. Research adds to the stock of the Fund’sknowledge and human capital and feeds through intooperational work to achieve the overall objectives ofthe Fund.

21. For the purposes of our evaluation, we haveidentified three categories of research at the Fund. Re-search in each category has different objectives andcan result in different end products—some of whichwill be stand-alone research papers while others willbe incorporated into staff reports, papers presented tothe Executive Board, or internal memoranda.

Policy Foundation Research

This is research that develops basic analyticaltools and frameworks on which the development andanalysis of policy rests. Some research of this kind isdone in academia. At its broadest, it covers a widevariety of research, some of which is only very dis-tantly related to policy. Policy foundation researchalso includes the creation of new data sets that areessential for sound empirical research. Some recentexamples of policy foundation research conducted inthe Fund include the following:

• “Are Currency Crises Predictable?” Thispaper evaluates the effectiveness of three dif-ferent pre-1997 econometric models in pre-dicting currency crises.

• “Asymmetric Information and the MarketStructure of the Banking Industry.” This paperexamines the role of asymmetric informationin the determination of the equilibrium struc-ture of loan markets in the context of a multi-period model of spatial competition.

• “Does the Introduction of Futures on Emerg-ing Market Currencies Destabilize the Under-lying Currency?” This paper investigateswhether volatility spillovers from the deriva-tive market destabilize the underlying cashmarket and disrupt the exchange rate policy.The paper examines three emerging marketcountries—Mexico, Brazil, and Hungary—that have already allowed derivative contractson their currencies to be traded.

Policy Development Research

This is research that draws on policy foundationresearch to create the broad policy frameworks(strategy) that guide the Fund’s operations. Recentexamples of policy development research conductedin the Fund include the following:

• “Sequencing Capital Account Liberalization:Lessons from the Experiences in Chile, In-donesia, Korea, and Thailand.” This paper ex-amines the sequencing of capital account liber-alization and draws lessons from experience infour emerging market economies: Chile, In-donesia, Korea, and Thailand.

• “IMF-Supported Programs in Indonesia,Korea, and Thailand: A Preliminary Assess-ment.” This paper examines the 1997/98Fund-supported programs in each of these countries and draws lessons from theexperience.

• “Dollarization: Implications for MonetaryPolicy.” This paper reviews recent trends in

Section II The Role of Research

15

The Role of Research


the use of foreign-denominated monetary as-sets in developing countries, then analyzesthe implications for the choice of exchangerate regime and choice of monetary aggregatefor programming purposes.

• “The Scope for Inflation Targeting in Devel-oping Countries.” This paper considers thewider applicability of inflation targeting as amonetary policy framework in several devel-oping countries.

Policy Analysis Research

This is research that draws on policy developmentand policy foundation research. It is research thatlooks at the specific details of a policy problem andis needed to provide policy advice in the day-to-dayoperations (tactics) of the Fund. For example:

• “Measuring Currency Volatility in Poland.”This paper assesses the degree of volatility ofthe Polish zloty in currency markets and con-siders whether the volatility of the zloty maybe increasing over time.

• “The Transmission of Monetary Policy in Is-rael.” This paper investigates the transmissionof monetary policy to real activity in Israelfrom January 1990 to April 1997 and assesseswhether monetary policy significantly influ-ences real activity and the relative importanceof different transmission channels from mon-etary policy to real activity.

• “Inflation Targeting in Korea: An EmpiricalExploration.” This paper explores some of thepractical aspects of a move toward inflationtargeting in Korea and assesses whether aninflation-targeting framework is likely to besuccessful in Korea.

22. The first two categories (policy foundation re-search and policy development research) require asubstantial amount of time to produce. The third cat-egory, policy analysis research, can sometimes in-volve a long research process, but often covers re-search conducted in relatively short timeframes (afew days to a month).

23. While there is likely to be disagreement overthe terms we have used to describe each type of re-search, or which category certain specific pieces ofresearch fall into, such disagreements should not de-tract from the importance of the general conceptualdistinction that we are trying to make between thecategories. Inevitably, in the Fund, these types of re-search will blend into each other. This is desirable.Research should be both proactive and reactive.Proactively, research ideas feed into a pipeline: thatis, policy foundation research feeds into policy de-

velopment research, which feeds into policy analysisresearch, which feeds directly into the Fund’s opera-tions. Reactively, problems or issues that arise dur-ing operations may call for research on policies,which in turn could stimulate policy foundation andpolicy development research.

Why Does the Fund Need Research?

24. The Fund has two core functions:

• monitoring the economic performance ofFund members and providing them with pol-icy advice, technical assistance, and financialresources to improve macroeconomic and fi-nancial management in their economies; and

• monitoring and analyzing the functioning ofthe international monetary and payments sys-tem and providing advice for ensuring thesystem’s stability and efficiency.

25. Research of all three types we identified at thebeginning of this section is crucial to performingthese core functions successfully:

• Policy foundation research helps the Fund as-sess the models and assumptions that underlieits policy advice in light of new ideas, andprevent rigid, entrenched thinking. While itsrelevance for policy can be somewhat lessimmediate, in the long term, it can fundamen-tally change the way the Fund thinks aboutpolicy issues.

• Policy development research helps the Fundidentify successful, as well as demonstrablyfailed, general policy approaches. Thisknowledge can be used to help design betterpolicy recommendations for members and or-ganize its own operational policies (such asthe Fund’s lending facilities).

• Policy analysis research helps the Fund gaina thorough understanding of how its membercountries’economies operate, and what thetrade-offs between different policy optionsmay be. This is necessary in order for theFund to make sound policy recommendationsto individual member countries and to itsmembership as a whole.

26. Research is the means by which the Fund en-sures that the approaches it takes to the issues con-fronting its members are the best that the currentstock of knowledge and state of the art in policy de-sign can offer. Any organization that relies on oldways of doing things in a changing world will even-tually cease to be relevant. There is much still tolearn in the field of economic policymaking, and theFund must continue to learn and update its thinking.

16

The Role of Research

27. Of course, the Fund does not, and should not,try to produce all the research that is relevant for itsneeds:

• There are certain areas of economic research,particularly some areas of economic theory,where the relevance of the research is diffi -cult to link to policymaking. This research isbest left to academia. The Fund cannot hopeto create an environment that is conducive tothe production of this type of research. Evenif it could, and even if the research was of ex-treme importance for the Fund in the muchlonger term, it would be difficult to justify theFund conducting this type of research at theexpense of other forms of research that have amore direct payoff to the organization.

• The Fund can benefit from contracting withoutside researchers to conduct some of the re-search that it needs, particularly when out-siders conduct that research in collaborationwith Fund staff. This is a useful way of bring-ing skills and expertise that the staff do nothave into the organization.

• Most important, the Fund should make use ofgood research that already exists outside theorganization. It is clearly appropriate for theFund to conduct research on topics relevant toits functions that are also actively studied out-side the Fund, but it should use relevant re-search that already exists outside, without du-plicating it.

28. However, we strongly believe that the Fundshould have an in-house research capacity andshould rely only to a very limited extent on externalresearchers on contract to substitute for its own re-search. We consider that in-house research is essen-tial for the following reasons.

• Fund staff with a research orientation need tobe given an opportunity to conduct researchso that the Fund can continue to hire and re-tain the best economic minds.

• Research is more easily drawn into the processof policymaking when the same people thatconduct the research are also involved in theoperational processes of the Fund.

• Fund staff have an in-depth understanding ofthe problems and issues faced by the Fund’smember countries. They can use that knowl-edge to produce more insightful research thanthose approaching the problem from a moreremoved position.

• Fund staff can gain an in-depth intuition fromconducting their own research that can becalled upon to help in the policy design

process. Often, in policy design, decisionshave to be made quickly. The quality of thosedecisions can be improved by drawing onsomeone who has thought about the issue indepth.

• Successful in-house research can indepen-dently help enhance the credibility and repu-tation for quality of the Fund among the acad-emic community as well as policymakers inmember countries. This can produce greaterconfidence in the Fund’s recommendationsand reduce the likelihood that the Fund’s rec-ommendations will be ignored or doubted.

29. Some of the people we spoke to asked uswhether policy foundation research should be left tothe academic community. They were concerned that,for an organization with limited resources and anemphasis on operations, policy foundation researchmight be an unproductive luxury. Policy foundationresearch is relatively riskier than other forms of re-search because there is a greater likelihood that theresearch will not come up with useful results. How-ever, in our view, when the research succeeds, the re-turns are very likely to be high. It is our firm beliefthat policy foundation research should be an impor-tant and valued component in the portfolio of in-house research activities, both for all the reasons de-scribed above, and also because

• the objectives of academic research and theincentives in academia are different, andoften not appropriate for producing researchhelpful for the eventual formulation of policy.However, policy foundation research in theFund, if accompanied by the appropriate in-centives, should be policy relevant even if itdoes not feed directly into policy work;

• Fund staff are closer to some of the underly-ing, real-world issues (on which the Fund hasto advise its members) than academics, sothey will be able to identify and conduct pol-icy foundation research on these issues in amore effective and timely manner; and

• most important, policy foundation research isan essential element in generating and nurtur-ing an organizational culture that emphasizesfresh thinking, learning, and continually chal-lenging conventional wisdom.

Nature and Organization of Economic Research in the Fund

30. A description of the type of research con-ducted in the Fund and the way that research is orga-nized is found in Annex II.

17

31. We have divided our evaluation of research ac-tivities into two parts. In the first part, we assess theFund’s research against the characteristics that weconsider to be desirable for the research of a publicpolicy institution such as the Fund. In the second part,we evaluate the inputs into the research process, thatis, the way Fund research is organized and operates,and how this affects the Fund’s research output.

Evaluation of Research Output

32. The characteristics of successful research out-put differ across organizations. For example, the char-acteristics of successful research output in an acade-mic institution are different from those that shoulddefine success in a public-policy institution such asthe International Monetary Fund. In evaluating thesuccess of the Fund’s research output, we looked forthe following characteristics in the research:

• fresh, creative thinking that helps to developnew frameworks for Fund operations and pol-icy advice;

• sound analytical foundations;• support for day-to-day operations such as pol-

icy advice to policymakers in Fund membercountries;

• a focus on areas where the Fund has a com-parative advantage: i.e., areas in which theFund is uniquely placed, or better placed thanoutsiders, to use the resources available to it(expertise, data, information) to conduct goodresearch; and

• work that enhances the Fund’s reputation inits member countries, particularly amongtheir policymakers.

33. We came to the following four conclusions.

Conclusion 1: Although the Fund produces someexcellent research products, there is substantialroom for improvement in the overall quality of theFund’s research.

34. Policymakers and academics told us that cer-tain flagship research products such as the World

Economic Outlook and the International CapitalMarkets report wereboth of high quality and ofgreat relevance to them. Particularly noteworthy isthat academics, who are typically less interested inthese types of research products, cited the Interna-tional Capital Markets reports as filling a niche thatthey do not see filled elsewhere. We were also im-pressed by the quality of these products.

35. However, on the whole, with some exceptions,we were not as impressed with other research prod-ucts we reviewed.

36. We looked in detail at 30 Working Papers pro-duced in 1998, which were selected at random fromthe 182 Working Papers produced in that year (theselection was weighted to reflect the number ofWorking Papers produced by each department). Wedecided to restrict ourselves to papers from 1998 inorder to provide us with a good snapshot of whereresearch activities are at the present time. While weexpected to find a mix of very good and not so goodresearch products (such is the nature of any researchprocess), in general we found that most of the papershad one or more serious weaknesses.

37. In some cases, the research was on interestingtopics that were relevant to the Fund’s work, but theresearch was either not particularly innovative or itlacked depth. In some cases, the research could havebeen improved if more care had been put into the waythe research was specified and designed. We alsothought that several of the papers appeared to havebeen too hastily produced without devoting the timeto refine them. In other cases, the research was excel-lent, but either the subject matter was not closelyenough related to the Fund’s core functions or it didnot draw out the relevant policy conclusions from theresearch. In fact, some of the best analytical pieceswere rewritten chapters from Ph.D. dissertations thatwere not closely related to the Fund’s work.

38. Many of the randomly selected Working Pa-pers covered topics that were outside of the areas ofexpertise of our committee. To ensure that our con-clusions were not biased by an insufficient knowl-edge of the subject matter, we also undertook a casestudy of a particular topic of research on whichmembers of our committee have, ourselves, con-

Section III The Committee’s Evaluation of Research Activities

18


The Committee’s Evaluation of Economic Research Activities

ducted extensive research—inflation targeting (seeBox 1). Of the 12 pieces we reviewed, we consid-ered 3 of them to be quite useful for informing theFund’s analysis. However, the other 9 pieces werenot particularly noteworthy, either because theywere insufficiently developed to make them usefulfor policy advice or because the papers did not con-tain analysis that was superior to that which has al-ready been conducted outside of the Fund.

39. In addition to reviewing the random selectionof Working Papers and the papers relating to infla-tion targeting, we also wanted to get a sense of thequality of the research that Fund departments be-lieved to be their best work. We requested that alldepartments engaged in research send us one orseveral pieces of research, in any form, that theyconsidered to be their best work produced in 1998.In evaluating the 22 papers we received, we appliedthe same criteria that we suggest in this report forevaluating the quality of research in the context ofannual performance evaluation of researchers (seerecommendation 5).

40. We found 12 out of the 22 to be excellentproducts. Eight papers were analytically competentand extremely pertinent to the Fund’s mission.These did not contain any analytical innovation ei-ther in theory or empirical analysis, but they wereclearly of high value to the Fund’s work. Fourmore were of very high quality not only in theirrelevance for the Fund’s operations, but also inboth the theoretical and econometric sophisticationof their analyses. These might be accepted for pub-lication in top academic journals. Of the remainingten, five were of dubious value for the Fund’s oper-ations. These included some that were unrelated tothe main concerns of the Fund, and others thatwere either on esoteric topics or that could havebeen done better by researchers outside the Fund.Four others were analytically weak, in their theory,empirics, or both. The remaining paper was analyt-ically sound but did not sufficiently challengeFund thinking. Given that the sample representedresearch deemed by departments themselves to betheir best work, we expected a higher number offirst-rate pieces.

41. Finally, we also asked people outside theFund, both academics and policymaking econo-mists, for their impressions of the quality of Fundresearch. Outsiders’opinions are likely to be basedon their impressions built up over several years,and based on their perceptions of a wide range ofFund research products, including publications injournals with which they are familiar, so they givea perspective additional to our survey of recentFund research. Although these outsiders often ad-mired the Fund’s interpretive work, many said thatthe Fund is not currently contributing as much to

the stock of economic ideas that are relevant to pol-icy as it did in the past.2

42. Outsiders did admire some individual piecesof work, but frequently made the comment that theywere disappointed in the total volume of high-qual-ity work, given the resources available to the Fund.Some also thought that the research carried out inthe Fund was too “orthodox,” that is, too shy to chal-lenge conventional wisdom, particularly the Fund’sinternal wisdom. In addition, policymakers often didnot see the relevance of some of the research to theFund’s mission and commented that Fund researchlacked coherence.

43. Parenthetically, we would add that one of themembers of our committee participated in two ofthe recent conferences organized by the Fund(“EMU and the International Monetary System”and “The Future of the SDR in Light of Changes inthe International Financial System”). It was his im-pression, and that of other conference attendees hespoke to, that the conferences were not up to thestandards one expects from an institution such asthe IMF.

Conclusion 2: The mix of research conducted atthe Fund needs to be more directed to areas whereit can add the most value.

44. Our reading of various pieces of Fund researchand outsiders’reactions to the research they havebeen exposed to also suggests that the focus of theFund’s research output could be usefully reoriented.

45. In addition to reading the 30 Working Papersand the inflation targeting research, we examinedabstracts of 364 Working Papers written in 1997 and19983 and read various other pieces of research indetail (Staff Memoranda, conference volumes, Oc-casional Papers, etc. from all parts of the Fund). Wealso collated a list of all distinguishable researchoutput conducted in the Fund in the years 1995through 1998, and categorized the research in vari-ous ways (see Tables 1–5 in Annex II).

19

2We would note, however, that outsiders’perceptions may notfully take account of the fact that in the period of the late 1980s toearly 1990s, the Fund’s research was not perceived within theFund as being successfully integrated into its operations.

3Of the 364 Working Papers, 138 (or a little over a third) wereon topics of concern to industrial countries only and 166 (or lessthan half) were on topics of interest to developing countries. Theremaining 60 were either theoretical or general enough to be ofpossible interest to both groups of countries. In addition, using aquick, simplified ratings scale, we assessed the relevance of theresearch for the Fund and the extent to which it made use of theFund’s special expertise and advantages. Our results, while sub-jective, suggest that a large number of the Working Papers wereon topics that are not central to the Fund’s operations and thatmuch of the research is on topics already widely studied outsidethe Fund.


46. Our conclusions from these exercises arethat, while Fund research covers most of the widerange of issues of relevance to the Fund, the mix of research could be improved to better exploit the Fund’s comparative advantage and increase the coverage of underrepresented areas of Fund research:

• Much of the country-specific research may bepolicy relevant, but it does not adequately ex-ploit the Fund’s comparative advantage ofknowledge about a wide range of countries todevelop appropriate general frameworks forpolicy (see case study, Box 1. See also Table1 in Annex II, which, by a somewhat simplis-tic measure, indicates that about 40 percent ofthe Fund’s research (by volume) is country

specific, and about 25 percent is cross coun-try). We were also somewhat surprised thatmore of the research did not examine the ana-lytical basis for Fund programs.

• Much of the country-specific research onindustrial countries does not have suffi-cient value added; that is, it does not addmuch to what is already being produced byboth policymakers and academics in thesecountries (see Table 2 in Annex II for abreakdown of research by type of countryand Table 3 for a breakdown of research bydepartment).

• Financial sector research is underrepresentedrelative to its importance (as illustrated by therole of financial sector problems in Japan and

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Inflation targeting has recently become the monetarypolicy strategy of choice in several industrial countriesand a few emerging market countries. Inflation target-ing involves:

• public announcement of medium-term numericaltargets for inflation;

• an institutional commitment to price stability as theprimary, long-run goal of monetary policy and toachievement of the inflation target;

• an information-inclusive strategy, with a reducedrole for intermediate targets such as money growth;

• increased transparency of the monetary policystrategy through communication with the publicand the markets about the plans and objectives ofmonetary policymakers; and

• increased accountability of the central bank for at-taining its inflation objectives.

Inflation targeting has become increasingly relevant tothe Fund’s analysis of monetary policy in Article IVconsultations and programs. Indeed, in the current Fundprogram with Brazil, the Fund has agreed with Brazil onthe implementation of a new inflation targeting regime,and will monitor its implementation under the program.

Our search of the research output of the Fund in thelast five years turned up 12 research products that fo-cused on inflation targeting:1

• One Working Paper on the theory and policy impli-cations of inflation targeting (policy foundationresearch);

• Two Working Papers on the cross-country experi-ence with inflation targeting and whether this strat-

egy is feasible in developing and transition coun-tries (policy development research).

• Nine papers on actual or potential inflation target-ing regimes in individual countries (policy analysisresearch). Of these, three appeared in “Selected Is-sues” documents associated with Article IV consul-tations for industrial countries (Canada and theUnited Kingdom). Four more on industrial coun-tries appeared as Working Papers or PPAAs(Canada, the United Kingdom, Italy (PPAA), andKorea), and two, dealing with developing/transitioncountries (Poland and the Philippines), appeared asWorking Papers.

The breakdown above clearly highlights the following:

• The bulk of the research is country-specific, policyanalysis research. Only 25 percent of the researchis in the policy foundation or policy developmentresearch categories.

• The bulk of the country-specific research is on indus-trial countries. (The classification here is thus consis-tent with the results in Table 2 in Annex II: a substan-tial amount of research focuses on industrializedcountries relative to the proportion of the Fund’smembership that is made up of industrial countries.)

Of the 12 pieces of work, we judged 3 of them to beboth relevant and valuable to the Fund’s operations:

• Although the two cross-country, policy develop-ment research pieces do not break any newmethodological ground and often rely on researchdone outside the Fund, they do provide a sensiblesurvey of the key lessons that have been learnedfrom the inflation targeting experience in thecountries that have adopted it. Both of thesepieces clearly benefit from their multicountryfocus, which allows the authors to see the com-mon features in the different countries’experience

Box 1. Case Study of Research on Inflation Targeting

1This may not represent the total Fund research output oninflation targeting because some of the work on inflation tar-geting was not easily identifiable from the title of the paper.


recent crises in Mexico, East Asia, and Rus-sia) (see Table 4 in Annex II for a breakdownof research by topic).

47. Background research for Article IV consulta-tions on industrial countries that synthesizes workdone outside the Fund should, of course, continue.However, often, brief summaries that reference thework done outside the Fund would be adequate for informing the Executive Board and country authorities.

48. Outside policymakers and academics that weinterviewed expressed similar views. They oftencommented that a disproportionate amount of Fundresearch appears to be conducted on individualcountries, particularly on industrial countries. Theysaid that much of this research focused on narrow

and often technical issues, or on issues where goodwork was already done outside the Fund, rather thanon broader problems that were common to manycountries. Some senior policymaking economistsindicated that the Fund spends too much time sum-marizing work that is already well expressed out-side the Fund, and thus does not provide sufficientvalue added.

49. They also indicated that, except for the Inter-national Capital Marketsreport, they have not seenmuch Fund research on financial sector issues,which they regard as an important priority for theFund. The link between macroeconomic and finan-cial sector performance has been recognized in theeconomics literature as a very important area of re-search, and it is an area in which the Fund researchhas been initially slow to respond.

21

and to provide guidance as to what works andwhat doesn’t. Both pieces, and particularly theone that discusses the scope for inflation targetingin developing and transition countries, develop aframework for deciding when inflation targetingis likely to work in developing and transitioncountries. This is highly useful to the Fund’s oper-ations because inflation targeting is an importantalternative strategy to exchange rate pegs, whichare currently used by many emerging market andtransition countries.

• The paper on the feasibility of inflation targeting forKorea (which uses the policy framework laid out inthe two papers above) is a very thorough empiricalanalysis of whether inflation targeting would belikely to be successful in Korea. It provides the veryuseful answer that the preconditions for inflationtargeting to be successful in Korea are indeed inplace. This research could thus be highly usefulboth to the Fund in its policy recommendations, andto the member country, Korea.

The other papers were less useful.

• The piece of policy foundation research lackedfresh, innovative thinking.

• The two pieces of country-specific research on de-veloping/transition economies were not as thor-ough as the piece on Korea. One of the pieces wastoo superficial to provide a solid foundation forpolicy advice. We suspect that the authors were un-able to devote enough time to the work to do a thor-ough job. This is consistent with complaints fromresearchers, particularly in area departments, thatthey do not have sufficient time to do a thoroughjob on their research.

• The other six pieces of research on individual in-dustrial countries did not appear to be the best use

of the Fund’s scarce research resources. The threepieces of research that appeared in “Selected Is-sues” as part of the Article IV consultations werenarrowly focused, mostly repeated what has al-ready been discussed in well-written research pro-duced outside the Fund, and added little that is notalready well known in the central banks of thesecountries. The three Working Papers conductedsome sensible empirical analyses, but in all threecases the central banks of these countries, which allhave good research departments, have conductedresearch of higher quality because central banks ofthe three countries in question have much larger re-sources to devote to these topics than the Fund, andtheir economists are as well trained as the econo-mists at the Fund.

What conclusions can we draw from these findings?They suggest the following.

• Much of the country-specific research is less valu-able than cross-country research. (We found the lat-ter to be potentially of greater value in assisting theFund’s operations.)

• Area departments may not have time to do suffi -ciently deep and thorough research, with the resultthat research is too superficial to be useful for pol-icy analysis (this is consistent with what area de-partment economists have told us).

• A substantial amount of resources is being directedtoward industrial country research, which may notalways have high payoffs. It can take up to threemonths of an economist’s time to produce a piece ofresearch to appear in a Selected Issues document.This suggests that if less research were done on top-ics where the Fund can add little value, it would freeup significant amounts of time in the organization topursue research with higher value added.


Conclusion 3: Research in functional departmentsneeds to be integrated to a greater extent into oper-ational work.

50. For research to be both valuable and valued in apublic policymaking organization it must be relevantto, and integrated into, operational work. Our inter-views with members of the Executive Board, the staff,and people outside the Fund revealed the following.

• Staff in area departments, which are the oper-ational core of the Fund, consider that re-search conducted in the functional depart-ments is often not sufficiently relevant totheir needs.

• Staff in functional departments expressedfrustration because they believe that their re-search is not read by area departments, andtheir ideas are not adequately taken into ac-count when making operational decisions.

• Some Executive Directors, outside policy-makers, and academics believe that Fund re-search does not provide a solid foundation forFund policy advice. Some note that WorkingPapers, in particular, seem too academic to beuseful for policy analysis.

• On the other hand, members of the ExecutiveBoard valued highly the World Economic andMarket Developments presentations. Thesepresentations are provided to the ExecutiveBoard by the Economic Counsellor every sixweeks. They outline key recent developmentsin both markets and the economies of themember countries. They not only provide aforum for the Research Department to ex-press its views on current economic events,but also provide the Department an opportu-nity to comment on Fund policy advice.These presentations are highly valued notonly because they provide an excellentoverview of the world economy, but becausethey are candid and, on occasions, challengeprevailing views in the Fund.

Conclusion 4: Fund researchers do not have thevisible profile in the outside world that they havehad in the past.

51. The purpose of Fund research should not onlybe to provide insights for internal analysis. Fund re-search also has a role in lifting the profile of theFund in the outside world. Research acts as a mar-keting tool to help the Fund sell its ideas and de-velop an external constituency for its work.

52. Fund researchers play an important role inthis regard. In interviews, many people outside theFund, particularly in academia, have told us thatFund researchers are not as active in outside con-

ferences as they once were and that their research,both published and unpublished, does not receivethe attention that it once did. We have also notedthe relative absence of Fund staff at events orga-nized by two well-known public policy research or-ganizations—the National Bureau of Economic Re-search and the Centre for Economic PolicyResearch—which are major sponsors of confer-ences on public policy that are relevant to the pol-icy issues facing the Fund and which are attendedboth by academics and policymakers.

Evaluation of Inputs and the Research Process

53. What lies behind the conclusions on researchoutput reached above? Why is the general quality ofthe Fund’s research not as high as might be expected?Why is the mix of research not optimal? Why is therenot a stronger link between some of the Fund’s re-search and the operational work done in the Fund?

54. To answer these questions, we need to analyzethe input side of the equation: that is, how the re-search process actually works at the Fund. We haveexamined the research process, and inputs into it,under five basic headings: organizational structure;culture; incentive structure and accountability; re-source allocation; and dissemination of research.

Organizational Structure

55. As described in Annex II, research is con-ducted throughout the organization. Furthermore,what could be thought of as the Fund’s core researchcapacity is actually split among four departments:Monetary and Exchange Affairs, which specializesin research on monetary and exchange rate issues;Fiscal Affairs, which specializes in research on fiscalissues; Policy Development and Review, which spe-cializes in research directly relating to operationalneeds (i.e., policy development); and the ResearchDepartment, which conducts research across a broadspectrum of issues.

Decentralization of research is appropriate for theFund, but greater coordination could generate amore appropriate balance and mix of research con-ducted by the Fund.

56. As a general principle, we support this decen-tralization of research. Capacity for research shouldbe maintained in area departments and in other func-tional departments beyond the Research Depart-ment, to ensure that

• operational economists with significant in-sights into difficult policy issues they have

22


experienced can explore those issues indepth;

• timely research can be conducted (this is oneproblem with hiring external contractors toconduct research); and

• operational economists can keep in touchwith the economic theory relevant to theirneeds and maintain their own human capital.

57. However, for research to meet the Fund’s ob-jectives successfully in a decentralized environment,some central coordination/priority setting process isrequired to provide a strategy that ensures that theright balance of research is achieved. Currently, thiscoordination is weak, with the following results, asreported to us by staff and evident in the Fund’s re-search output:

• There is substantially more research con-ducted in divisions in area departments thatdeal with nonprogram countries becausethey have more time to do research. Divi-sions that deal with program countries (onesto which the Fund makes its financial re-sources available with certain conditions at-tached) typically have little time to do re-search on these countries or any otherrelevant subjects.

• Much of the research undertaken that is de-cided at the division level in area departmentsis very specific to a particular country. This isdriven by the primacy of the bilateral rela-tionship of the Fund with each of its individ-ual members.

58. While country-specific research is important,we take the view that if priorities for research wereconsidered on an organization-wide basis, it wouldmake more sense for the Fund to allocate relativelymore resources to research on program countries andto research that compares similar countries or simi-lar policy issues.

59. One might expect that these issues could betaken into account in the budget allocation process.In reality, however, like most organizations, a zero-based budgeting effort (that is, one in which the al-location of resources between activities, divisions,and departments is completely reconsidered fromscratch) is not undertaken, so historical patterns ofexpenditure continue. The Working Group on FundPolicy Advice has recently taken on some role insetting priorities for research that is beneficial tothe Fund as a whole, but we have been told that itseffectiveness could be substantially improved.

Research quality could be improved by payinggreater attention to ensuring that staff are givenuninterrupted blocks of time to conduct research.

60. Research is a highly specialized, time-consuming job requiring uninterrupted blocks oftime to be devoted to it if it is to be done success-fully. Thus, staff, while engaged in research, have tobe protected from the demands of operational andadministrative work. This is more difficult toachieve in a decentralized environment for research,because research may actually take up only a smallfraction of an economist’s time.

61. Staff we have spoken to in area departments,and often in the functional departments (Fiscal Af -fairs, Monetary and Exchange Affairs, Policy Devel-opment and Review, and Research), have indicatedthat they find it difficult to find blocks of time to workon research because operational duties keep interrupt-ing them. They think that the quality of their worksuffers because they cannot find uninterrupted time tothink deeply about the research they are doing.

Culture

62. The Fund’s mandate requires it to hold regularconsultations with each of its members and to pro-vide financial resources to some members underwell-defined circumstances and conditions. Effectiveexecution of this mandate requires that the Fundspeak with one clear voice and make its decisionsquickly. Logistically, these activities require good internal organization, and a clear, well-structured decision-making process. The Fund is strong in these dimensions.

63. Nonetheless, ensuring that the Fund makes gooddecisions requires that it also cultivate an environmentthat encourages the production of good thinking, rele-vant research, and the absorption of that research intothe organization’s core work. That means a culture that

• accords high value to research;

• encourages risk-taking while recognizing thatsome ideas might prove to be dead ends;

• is tolerant of seemingly heterodox ideas fromboth inside and outside the organization thatchallenge conventional wisdom and stimulatefresh thinking;

• allocates adequate time for creative thinkingby its economists;

• encourages lively debate of challenging, cur-rent policy problems/options;

• promotes a learning organization in whichpeople’s human capital is kept high;

• has good communication and collaboration,especially between researchers and opera-tional staff; and

• avoids excessive hierarchy that inhibits ideasfrom blossoming at all levels.

23


64. We have found that, while all these attributesexist to some extent in the Fund, there are areaswhere there is substantial room for improvement.

While Fund staff recognize the value of researchin the organization, this is not always reflected inthe organization’s day-to-day priorities as itshould be.

65. Staff at all levels in the organization, fromdepartment directors to young desk economists,have indicated that they do not believe enough pri-ority is being given to allocating time for staff to dohigh-quality, innovative research. Time for re-search is typically treated as a residual (after avail-able staff time has been allocated to other higher-priority activities) and many staff consider that re-search has been squeezed out by increased operationaldemands in recent years.4 Staff in operational depart-ments have also told us that they need more time tothink and reflect on the possible research issues aris-ing out of their operational work and to be able to ab-sorb the results of research done elsewhere.

66. Specifically, staff have told us the following.

• In divisions of area departments that primar-ily focus on program countries, very littlestaff time is put aside to do research, or evensimply to read research or think about re-search issues. Operational “fire-fighting”takes up most of their time.

• In divisions of area departments that are notresponsible for countries with programs, staffconduct research in conjunction with ArticleIV missions, but have little time to conductpolicy development research or to step backand evaluate whether past policy advice wasappropriate. Some also reported that the re-search they conduct for Article IV consulta-tions is rushed.5

• In functional departments, staff are givenmore time to do research, but still find thatoperational work frequently limits their abil-ity to set blocks of time aside for research,which affects the quality of the product.

• In the Research Department, policy analysisresearch products in the form of the WorldEconomic Outlook, the International CapitalMarketsreport, and various other activitiesare absorbing an increasing fraction of the de-partment’s time. Staff say that this is crowd-ing out other types of research.

67. Staff, particularly those in area departments,have expressed concern that this lack of prioritygiven to research contributes to insecurity about therobustness of their policy analysis.

68. Only in the IMF Institute, which has not beena home for research in the past, do staff say that theyhave time for all types of research. We have beentold that one reason that the Institute has built up itsresearch capacity in recent years is that it felt thatnot enough research was being done elsewhere inthe organization, particularly on issues central to theFund’s mandate that affect developing countries.The research done in this department has helped im-prove the quality of teaching and thus of the Fund’stechnical assistance operations, but it could also playa more useful role in other Fund operations if it werebetter integrated with the rest of the Fund.

69. We also found two aspects of the Fund’s oper-ational rules and policies that suggest that researchdoes not have a high enough priority in the organi-zation. First, the hiring procedure of young econo-mists (into the Economist Program) places insuffi -cient emphasis on research capabilities ofcandidates. The initial screening of candidates inthe first interview does not focus on the applicant’sresearch capabilities. The second round of inter-views does include a discussion of the applicant’sresearch work, but applicants are not asked to pre-sent their research in a seminar, a standard part ofthe hiring process in other public policy institutionswhere research is important.

70. Second, one of the Fund-wide personnelguidelines, the so-called mobility requirement, canfrustrate good researchers. In order to be promotedto a position at the B-level (managerial responsibili-ties), an A15 candidate must have spent at least twoyears either working outside the department they arecurrently in (excluding the Economist Program) orundertaking an approved external assignment. Oth-erwise, they need to move to another department inorder to be promoted.

71. We strongly support the concept behind themobility rule. Mobility is an important way of pro-viding staff with a stimulating and varied career. Italso helps prevent country economists from becom-ing apologists, rather than impartial analysts of thecountries they work on. It also ensures that Fundmanagers understand different aspects of the Fund’soperations and it helps create links between different

24

4We did not find irrefutable evidence that this has resulted in adecrease in the number of research products in recent years (seeTables 1–5 in Annex II, which show a decline in research in 1995to 1997 but an increase in 1998. However, the list of researchproducts for 1998 may, for various reasons, include more of thetotal research than the lists for earlier years). Nonetheless, thestaff ’s concerns that research is being squeezed out could be animportant factor behind the observation that the quality of re-search is not as high as might be expected.

5Our reading of the research output in paras. 32–52 providessupport for this view. We sensed that in area departments, re-search was often hastily done without any prospect of staff beinggiven the time to revise and refine their research.


parts of the organization. This is particularly valu-able for creating links between area departments andfunctional departments, and ensuring that all Fundeconomists have had “hands-on” experience in oper-ational work.

72. However, the current mobility system doesnot appear to ensure that good researchers whohave left the Research Department to meet the mo-bility requirement can return relatively quickly tothe Research Department, where their strengths andinterests lie.

More open communication and stronger collabora-tion between departments would help strengthenthe link between research needs in area depart-ments and research conducted in functional de-partments, and improve the overall relevance andquality of Fund research.

73. The Fund is an institution endowed with anextraordinary amount of human capital. The qualityand diversity (especially in terms of culture) of thestaff is exceptional. The externalities that could beassociated with the intellectual interactions amongthis group of people have the potential to be im-mense. Yet this is an inefficiently used resource inthe Fund.

74. A culture of open communication, with a livelyexchange of views between people from all over theorganization with different experiences, is essentialto the success of any research process. This exchangeis also likely to generate greater collaboration be-tween people in the organization. Staff, former staff,and outsiders who have interacted with the Fundhave told us that they believe there are weaknesses inthe Fund’s interdepartmental communications net-works and that collaboration could be improved.

• In general, staff at all levels of the organiza-tion, as well as outsiders, have commentedthat Fund departments are like fiefdoms (evenmore so than other bureaucracies they haveworked in), and that this is inhibiting commu-nication between departments.

• Specifically, many have commented thatthere is little communication between staff inarea departments and functional departmentsin discussing policy problems outside of theformal review process.6

• A number have commented that collaborationbetween staff in different departments, in theprocess of generating ideas for and producingresearch on interesting and relevant topics, issporadic and not actively encouraged by theorganization. Many feel that this reduces the

relevance of research conducted in the Re-search Department, in particular.

• Some staff have commented that they find itdifficult to access data that they need for re-search that resides in other departments be-cause of a lack of cooperation by those de-partments.

More open communication and stronger collabora-tion between the IMFand the World Bank wouldhelp avoid duplication of research effort, exposestaff in both organizations to new ideas, and im-prove the quality of research.

75. There are potentially large synergies betweenresearch activities at the World Bank and the IMF.The Bank and the Fund have mutual interests in re-search topics such as financial sector reform, whichare important to policy development in both institu-tions. Collaboration could improve the quality of re-search on these topics in both institutions. Further-more, because of limited resources, the Fund mustlimit the research topics it can explore. Rather thanduplicate research conducted across the street at theWorld Bank, it could exploit the research that isdone at the Bank.

76. Discussion with staff at both institutions indi-cates that little collaboration in the research processis taking place. Staff engaged in research at the IMFhave told us that collaboration with the World Bankis not encouraged and that the only research collabo-ration with the World Bank is the result of personalrelationships.

The Fund’s openness to new ideas, which reflectsitself in innovative research that challenges exist-ing norms, could be improved by encouraging aculture that is more accepting of diversity of views.

77. As we indicated at the beginning of this sec-tion, the Fund needs to make firm decisions andspeak with one voice on many occasions to performits functions successfully. However, this must nottranslate into a culture of conformity of views withinthe organization. There is evidence that this may beoccurring at the Fund. Staff and former staff havetold us that

• although the internal review process gener-ates debate, staff are sometimes reluctant toexpress their views and do controversial re-search because there is a strong sense of theneed to fit in with the norm/accepted wisdomin the organization;

• the organization emphasizes generating con-sensus at the expense of deeper debate; and

• when alternative views are expressed, theyare often met with hostility.

25

6See Annex III for a discussion of the review process.


78. This is an issue that many public policy insti-tutions struggle with. Bright, ambitious staff canfeel that in order to succeed in the organization,they should not rock the boat, and indeed this iswhat we have heard from Fund staff. A concertedeffort needs to be made to guard against this danger-ous tendency.

Research that displays free thinking is importantbut can upset relationships with member countries:the Fund needs to pay more attention to the bal-ance between these two objectives.

79. The Fund relies on maintaining good relation-ships with its member countries in order to continueto obtain information from them to enable it to con-duct analysis. Of necessity, this means that the Funddoes not have the freedom to conduct any research itwants. However, it is also important to ensure thatsufficient freedom of research is maintained so thatthe Fund can effectively and impartially advise itsmembers.

80. A number of current and former staff have toldus that they believe that

• in some instances, research papers associatedwith missions are deliberately noncontrover-sial so as not to upset member countries; and

• research papers on controversial issues arediscouraged, and staff do not feel that theywould be valued or rewarded for conductingsuch research.

81. While these are clearly only perceptions, thefact that they exist and are widely shared is cause forconcern, as is the influence they appear to be havingon the behavior of staff conducting research.

The quality of Fund research and the Fund’s repu-tation would benefit from greater openness to theoutside world.

82. Just as internal communication is importantfor the exchange of ideas, communication with poli-cymakers and academics outside the Fund will alsogenerate more creative research. Furthermore, it willalso raise the profile of the Fund in the outsideworld, which enhances the Fund’s reputation (seealso paras. 125–39, on dissemination).

83. Our interviews with staff and outsiders, aswell as our own personal experience indicate that,while the Fund is moving in the direction of greateropenness, there is room for improvement.

84. Of particular importance to research, staffhave told us that

• participation in outside conferences is notsufficiently valued in the organization. Onestaff economist told us that he had to use partof his annual leave to attend and make a pre-

sentation at a conference held by the Centrefor Economic Policy Research, a prominentpolicy research institute; and

• some departments in the Fund do not setaside sufficient resources to allow more pro-ductive researchers to attend some confer-ences that would be useful for both the staffmember and the organization.

85. More generally, outsiders have told us thatthey have often seen—as have some members of ourCommittee—an unwillingness on the part of someFund staff to take the Fund’s critics seriously and toengage them, both in their research and in their com-ments at conferences. Fund staff are instead seen astaking a defensive attitude.

86. In addition, we have heard both from Fundstaff and outsiders that when hiring midcareer staff,the Fund places insufficient value on outside experi-ence, with the consequence that people from seniorpositions outside the Fund are offered fairly juniorpositions at the Fund. This may mean that the Fundis missing opportunities to attract midcareer peoplewho would bring in outside expertise that the Fundwould find very valuable.

A culture shift in the Research Department wouldraise morale and help strengthen the contributionof the department to the policy developmentprocess.

87. All the issues relating to the Fund’s culturediscussed above are equally relevant to the ResearchDepartment. However, as the Research Departmentis the one place in the Fund where research is theprimary activity, it is particularly important to ensurethat the Research Department subculture encouragesresearch that is both of high quality and relevant tothe Fund’s needs.

88. The Research Department should have an im-portant role in questioning existing paradigms andframeworks relevant to the Fund’s work throughpolicy foundation and policy development research.Creating a culture that encourages this requires(among other things) that the management in the Re-search Department be actively engaged in leadingthe research process.

89. Good research managers supply research lead-ership by identifying important research issues andby ensuring that research is related to current policyissues, while at the same time giving enough free-dom to individual researchers to motivate them toproduce innovative work. In addition, they must bedoing research themselves and be active in attendingseminars and commenting on staff ’s research. Re-search managers, in particular the Director of theResearch Department, must also be able to integratethe research ideas of the staff into the Fund’s opera-

26


tions and be listened to at the table where policy is designed.

90. We spoke extensively to staff in the ResearchDepartment, and to staff and former staff that hadspent time in the Research Department. Repeatedly,we received the following comments about the waythey perceived the Research Department culture:

• The Department’s management places a highvalue on policy analysis research in the formof the World Economic Outlook, the Interna-tional Capital Marketsreport, and severalother policy analysis research products (over30 percent of the Department’s professionaltime is devoted to these products, by its esti-mate), and has increasingly focused on the re-view of other departments’work (about 8 per-cent of the Department’s professional time isdevoted to this). This focus is crowding outpolicy foundation research and policy devel-opment research.

• The Front Office and division chiefs are notperceived as being sufficiently engaged in theresearch process outside of the World Eco-nomic Outlookand the International CapitalMarketsreport—for example, by attendingseminars; reading or commenting on re-search; being active researchers themselves;and promoting/encouraging research otherthan policy analysis research.

• Research, beyond that contained in policyanalysis research products such as the WorldEconomic Outlook,and the InternationalCapital Marketsreport, is not sufficientlyvalued or recognized in reward and promo-tion decisions.

• The Department is quite hierarchical—an or-ganizational structure that is not conducive tofrank exchanges of ideas and fresh thinking.

91. Some current staff told us that they are frus-trated because they perceive that the research workthey do is not taken seriously by the Department.Some suggested that this may even be acting per-versely to reduce the relevance of their research forthe organization because they conduct whatever re-search will best ensure that they can maintain a repu-tation outside the Fund so that they can keep theiroutside options open. This may, in part, explainsome of the less relevant output we have observed.

92. In the past five years, the Research Depart-ment has given increasing attention to the analysis ofcurrent events in the world economy and marketsand to involvement in the review process, as a meansof making the Department more relevant and visible.This is not entirely inappropriate. We agree that therelevance of the Research Department is essential

and that it needs to be integrated into the Fund’s op-erations. The policy analysis research products thatthe Research Department produces are both visibleand valuable, particularly outside the Fund.7

93. However, the Research Department has soughtto achieve greater relevance by increasing theamount of its policy analysis research at the expenseof its role in policy development, and has developeda culture compatible with these objectives. Policydevelopment and policy foundation research that isrelevant to the Fund is essential for the Fund’slonger-term success, and we believe this researchneeds to be reemphasized in the Department. A cul-ture shift is required in the Department to bring thisabout.

Incentive Structure and Accountability

94. Closely related to the need to foster an appro-priate culture (discussed in the previous subsectionon culture) is the need to put in place the right incen-tive structure and make staff accountable in order toensure that good, relevant research is conducted andbrought into the Fund’s operations. The general mes-sage we are receiving from staff is that the Fundneeds to pay greater attention to both these issues.

In the Fund as a whole, improvements in the for-mal accountability system (the annual perfor-mance review), including a credible commitment toterminate very poor performers, would boostmorale and improve staff quality, affecting posi-tively the quality of research.

95. Almost no staff member is ever classified asa poor performer in the performance evaluationsystem. Box 2 outlines the performance classifica-tions and documents performance ratings in 1998for professional grades in most of the departmentswhere research is conducted. The box indicates thatof the 770 people rated, not one received an unsat-isfactory rating of 4. Only one person received arating of 3, which indicates performance belowstandards. All the other 769 received a rating of 1or 2, which indicates either extraordinary perfor-mance or performance that is above or meets stan-dards. Furthermore, all departments have allocated“1” ratings up to the maximum allowable 15 per-cent of their staff.

96. This contributes to the observation that, afteran initial probationary two-year contract, few peopleare encouraged to leave the Fund on account of poorperformance. Total turnover (excluding retirementand expiration of secondments) among economist

27

7Although some staff feel that not enough effort is made to in-tegrate the analysis contained in these products into the Fund’soperational work.


staff has been less than 4 percent per annum in thelast five years, and a much smaller percentage thanthis is likely to be due to unsatisfactory performance.This is likely to affect the performance of the wholeorganization including research activities.

Across the Fund,8 changes to elements of the cur-rent accountability and incentive regimes wouldcontribute to the production of more relevant,high-quality research.

97. Staff from various different parts of the Fundhave told us that a serious assessment of research

quality is not uniformly included as an importantfeature in their annual performance reviews. Severalstaff indicated that the quantity of research (say, thenumber of Working Papers) was taken into accountin their annual performance review, but they did notthink that their managers paid enough attention to itsquality—particularlywhether the work had beenpublished in good journals or whether it was provinguseful in the operations of the Fund (both importantindicators of quality).

98. If staff think that the quality of their researchwork is not being valued, they are likely either to payless attention to the quality dimension of their re-search, or to continue to produce high-quality re-search, but feel frustrated and seek to leave the Fund.This can result in a loss of some of the best staff who

28

8That is, in all area departments and research producing func-tional departments (Policy Development and Review, Monetaryand Exchange Af fairs, Fiscal Af fairs, IMF Institute, and Research).

The annual performance review is a formal mecha-nism for supervisors and their staff to review the staffmember’s performance over the course of the previ-ous year, give feedback, chart a work program and adevelopment program, and set results expectations forthe year ahead. The annual performance review(APR) is an input into salary, promotion, and staffingdecisions.

Central to the annual performance review is theAPR form. On this form, staff members record theirmajor responsibilities, contributions, and achieve-ments, along with any work assignment preferences,training needs, mobility aspirations, and other careerdevelopment issues. This is used as a basis for discus-sion between the staff member and the supervisor.The supervisor makes an assessment of the staffmember’s performance on the basis of the work doneby the staff member over the previous year and theextent to which the staff member meets the core com-petency requirements at his/her particular grade leveland job.

Once all performance reviews are completed withina department, the performance of all staff in the depart-ment is rated on a department-wide basis. Performancecategories are:

Category 1: An outstanding performer in relation todepartmental peers and/or has made an exceptionalcontribution in a particular area of Fund work (a capof 15 percent of staff per department is put on thiscategory).

Category 2: A staff member who has met or ex-ceeded the requirements and expectations for the jobat the grade level he or she is in.

Category 3: A staff member whose performance re-quires improvement in one or more important areas.

Category 4: A staff member whose overall perfor-mance was unsatisfactory, and who failed to meet

the basic requirements for the job in several impor-tant areas.

Under the Fund’s guidelines, a staff member can berated “3” only twice consecutively or twice within anyfive-year period. Staff must either be rated “4” or “2”in the following year. This is intended to strengthen theuse of “3” ratings to clearly signal the need for a signif-icant performance improvement and trigger the formu-lation of a performance improvement plan. A staffmember whose performance has been rated as a “4”will be placed on probation for at least six months. Thedistribution of performance ratings for 1998 for mostof the economist staff (and some noneconomists) isshown below. As can be seen from the table, ratings of“3” or “4” are very rare.

Box 2.The Fund’s Performance Assessment and Rating System

Distribution of Performance Ratings by Selected Departments, Grades A9 to B3

Ratings__________________Department 1 2 3 4

African 17 96 0 0Asia and Pacific 11 59 0 0European I 13 69 0 0European II 10 56 0 0Fiscal Affairs 11 61 0 0IMF Institute 6 28 0 0Monetary and

Exchange Affairs 9 49 0 0Middle Eastern 7 39 0 0Policy Development

and Review 13 69 0 0Research 9 52 0 0Western Hemisphere 13 72 1 0

TOTAL 119 650 1 0


can be most useful in policy formulation. Their depar-tures can also lead to an external perception that theFund does not value research quality, and thus to anerosion in the Fund’s ability to recruit superior staff.

99. Indeed, in recent years a number of excellentresearchers, who have very strong reputationsamong both academics and policymakers, have leftthe Fund. We spoke to some of these people, andthey confirmed what we heard from current staff:that they did not believe that the quality of their re-search was sufficiently valued in annual perfor-mance reviews, and that this was an important rea-son why they chose to leave the Fund.

100. Assessment of research quality is equally im-portant, to send signals to economists currently pro-ducing low-quality research that they should focusinstead on areas where their strengths lie.

101. Staff have the perception that staff membersare likely to rise more rapidly in the Fund hierarchy ifthey concentrate on highly visible operational work,such as work on an important program country. Thiscreates incentives to move out of research-intensivejobs in order to get ahead in the organization. Whileresearch is not a frontline activity, it is important toensure that incentives are adequate to ensure thatgood researchers remain in research-oriented jobs.

102. Junior-level, primary authors of major re-search papers that are discussed at the ExecutiveBoard do not often get the opportunity to sit at theBoard table and field questions from Board memberson their work. Instead, senior staff represent thepaper at the Board. This restricts the opportunities forstaff to learn from this experience and makes themless accountable for the work they have done onthese projects. Staff have told us that they find it dis-couraging when a more senior staff member, who didnot do the bulk of the work, gets praised for the workin the Board because they made the presentation.

103. Junior staff have expressed frustration thatsenior staff sometimes claim coauthorship of re-search products for which they have made little con-tribution beyond editorial comments. Not only is thisdemoralizing, but it can decrease accountability ofjunior staff for the quality of their research output.

In area departments, changes to incentives wouldimprove the quality of research conducted in thesedepartments, and encourage greater cooperationwith functional department staff, which would im-prove the quality and relevance of the work offunctional department staff.

104. Economists in area departments have told usthat they are given some rewards for producing re-search on the countries they cover, but, as we notedearlier, they do not think they are given sufficienttime to refine their analysis and produce researchthat provides a solid foundation for policy advice.

105. Economists in area departments have told usthat there are few incentives to encourage them toshare their knowledge and data about specific coun-tries with economists in functional departments or towrite papers with economists in other departments.

106. Staff in both area departments and functionaldepartments have told us that, because incentives forcollaboration are not strong, area departments are notbringing functional department researchers as fullyinto the policymaking process as they could be.

The value of the Research Department to the orga-nization could be enhanced by aligning incentivesmore closely with the desirable objectives of greaterinteraction with other departments and productionof relevant research.

107. Current and former Research Departmentstaff have indicated to us that there are

• few incentives operating in the department toensure that research outside of the policyanalysis research conducted (World Eco-nomic Outlook, G-7 notes, International Cap-ital Marketsreport, etc.) is relevant to the op-erational needs of the Fund; and

• few incentives for working with area depart-ments to develop research proposals andideas.

108. Some people have suggested that this is alsoa problem in other functional departments, but it isparticularly relevant to the Research Department, asit has the least involvement in the operational as-pects of the Fund’s work. Despite the Department’sinvolvement in the review process and policy analy-sis research products like the World Economic Out-look or the International Capital Marketsreport,many people have indicated to us that they still con-sider the Research Department to be insufficientlyintegrated into the work of the Fund.

Resource Allocation

109. Research is only one of the activities of theFund. When the Fund considers how to allocate re-sources across its activities, including research, itmust simultaneously consider whether resources areadequate and efficiently allocated and utilized acrossactivities.

110. In the subsection on organizational structure,we noted the concern of many staff who thought thatthere was not enough time made available for re-search and research-related activities. We take theview that more time is needed for research that is notassociated with Article IV consultations or policyanalysis research products such as the World Eco-nomic Outlook. However, it is not clear that the Fundneeds more staff to achieve this. Some of this time

29


can be created by changing the mix of research awayfrom country-specific research toward broader re-search that has the potential for higher payoffs formember countries and the Fund.

111. Furthermore, the time available to research ispartly a function of researchers’time allocated to ac-tivities other than research. It is therefore appropri-ate to consider whether the organization can free uptime for research by more efficiently conductingnonresearch activities. As we are not managementconsultants, we do not have the expertise or mandateto look at the efficiency of the overall organizationin detail. However, some efficiency issues wereraised so frequently by staff in interviews that theywarrant attention.

112. Compared to other public policy organiza-tions with which we are familiar, the number of re-search assistants relative to economists in the Fundis very low. Work that research assistants would nor-mally do in other organizations, such as data collec-tion and entry, spreadsheet manipulation, statisticalanalysis, and other sundry tasks are done by highlyqualified economists. As a result, economists spenda large amount of their time engaged in activitiesthat do not fully make use of their skills. This createssubstantial frustration for economists because theyhave less time to conduct the sophisticated analysisthey are trained for. In addition, using highly paideconomists to do a research assistant’s work is an in-efficient use of Fund resources.9

113. Currently, many of the Fund’s research assis-tants have worked at the Fund on a long-term basis.While some long-term research assistants can be use-ful, economist staff that we have spoken to have saidthat young, short-term research assistants are morevaluable in many cases because they bring the latesttechnology, skills, and enthusiasm to the job. In theorganizations that members of our committee havebeen a part of, we have also found this to be true.

114. The Fund has recognized that increasing thenumber of research assistants and shifting the mix ofresearch assistants toward more short-term, fixed-contract hiring of young research assistants will con-tribute to higher productivity and greater job satis-faction. Consequently, it has recently taken steps inthis direction, starting a program to hire more re-

search assistants—primarily young college gradu-ates with relevant backgrounds, on fixed-term, non-renewable contracts.

Redesigning the review process10 could both in-crease the effective contribution of researchers topolicymaking and reduce the time that reviewingabsorbs.

115. We strongly agree with the need for a reviewprocess, and see it as one of the Fund’s keystrengths. However, it is widely recognized in theFund that there is room for improvement in the wayit operates. Management has attempted, on severaloccasions, to improve the review process throughmandates in memoranda. Discussions we have hadwith economists throughout the Fund reveal contin-ued dissatisfaction with the review process.

116. Reviewers from the functional departmentssay that

• they have to comment on too many docu-ments, in some of which they have little expertise;

• they are consulted too late in the process toprovide any meaningful input; and

• area departments do not pay adequate atten-tion to their comments and do not take signif-icant differences of view to management.

117. Area department authors say that commentsfrom review departments are excessive and picky,and many are made by reviewers who do not knowenough facts about the country they are reviewing.

118. Review is one way in which researchers canhave an input into and be involved with operationalwork. However, the review process does not appearto be achieving this objective adequately while at thesame time it is absorbing substantial amounts oftime in both in area and functional departments.

Choosing visiting scholars in a more transparentway and reallocating some resources spent on visit-ing scholars to more outside consultant re-searchers would help maximize the value of theircontribution to the Fund’s research activities.

119. The Fund spends a fairly large amount of re-sources on bringing in visiting scholars. More than335 person-weeks are dedicated to this activity.11 We

30

9The two most probable reasons cited by the staff to whom wespoke for the relative lack of research assistants are the following.First, there is a prevalent attitude in the Fund that in entering thedata themselves, economists get a better understanding of thedata. We agree that economists need to understand the data, butengaging in the rote task of data entry and collection is not neces-sarily the best way of achieving this goal. Second, the Fund has ahead-count approach to budgeting. This has the unintended con-sequence of biasing hiring toward Ph.D.s because a manager willalmost always choose to hire a highly qualified economist over aresearch assistant if the extra cost of hiring an economist is not re-flected in his or her budget.

10Details on how the review process operates can be found inAnnex 3.

11The Research Department alone, which has a specific bud-get for visiting scholars, allocates about 275 person-weeks tovisiting scholars. The Fiscal Af fairs Department, also has a vis-iting scholars program of about 60 person-weeks. Other depart-ments also bring in visiting scholars on a short-term basis, uti-lizing accumulated vacant staff-weeks from their overallhead-count allocation.


believe that visiting scholars are of great value to theFund because they bring outside ideas into the Fundin an effective way, and being exposed to the re-search in the Fund, they help in raising its externalvisibility and influence.

120. However, two features of the program couldbe improved.

• Staff have told us that the procedure forchoosing visiting scholars is not sufficientlytransparent. A more open process of choosingvisiting scholars can help make sure that thescholars who interact with staff, and aretherefore of the greatest value for the Fund,are those invited.

• It is not always necessary to have scholarscome to the Fund to conduct research. Whilestaff benefit from the interaction with visitingscholars, it is our opinion that the overall visit-ing scholar budget is large enough to allocatesome of it to hiring consultants to conduct par-ticular pieces of work outside the Fund in col-laboration with Fund staff. This alternative cannot only be cheaper than having someone workon the premises of the Fund but if it involvesactive collaboration between junior staff andoutside consultants and the consultant is an ex-perienced scholar, it can help junior Fund staffto acquire valuable research experience. Thiscan be substantially more cost-efficient thanconducting a research project completely in-house using solely Fund staff.

Ensuring that the right staff have the opportunityto participate in Fund training programs will max-imize the benefit to the Fund from these trainingcourses.

121. Staff speak very highly of the IMF Institute’s“Economics Training Program,” which includeshalf-day seminars and multi-day courses conductedby well-known academics and policymakers on top-ics of interest to the Fund. Our committee was alsoimpressed by both the topics and the speakers cho-sen and the effort put into organizing these courses.The IMF Institute is continuing to increase the num-ber of seminars and courses available to enable morestaff to participate.

122. A number of staff have, however, raised con-cerns about the transparency of the process of selec-tion of staff (which is decided by departments, not bythe IMF Institute) to attend the courses and seminars.

• Some believe that priority is given to seniorstaff, rather than staff who most need to at-tend the courses to help them in their work.

• Some staff have said that they do not under-stand why some people are selected and oth-

ers are not, and they would prefer to see amore transparent set of criteria for selection.

Changes in the managerial structure of the Re-search Department could be beneficial to the envi-ronment for, and efficiency of, the researchprocess.

123. Currently, divisions in the Research Depart-ment report to coordinator/supervisors in the FrontOffice. Nonmanagerial staff in the Research Depart-ment have told us that they think this extra reportinglayer creates additional, unnecessary work. Al -though the nonmanagerial staff may not recognizethe importance of some of this work, our managerialexperience suggests there is some validity to theirconcerns. A large number of managers who are pro-ducing less research also means that the departmentproduces a smaller amount of research than if ittrimmed the number of managers at the top levels. Achange in the managerial structure could improvethe environment for and efficiency of the researchprocess.

Are more resources needed for research?124. Although we have indicated that more time is

needed for research that is not associated with Arti -cle IV consultations or policy analysis researchproducts, we strongly believe that all the measures togain efficiency, described earlier in the report,should be exploited fully before allocating addi-tional resources for research. However, if these mea-sures are not sufficient, the Executive Board mightconsider allocating more resources for research.

Dissemination

125. For research activities to be considered suc-cessful, research must not only be both relevant andof high quality, it must also be disseminated effec-tively to both internal and external audiences.

Improvements to the way research is disseminatedwithin the Fund would improve the impact of re-search on the Fund’s operations and build supportfor research within the organization.

126. In the subsection on culture, we mentionedthat communication links across departments in theorganization could be strengthened, and that open-ness to new ideas was important to improve the ef-fective use of research in the Fund. In the subsectionon incentives, we noted that incentives for coopera-tion between departments could be strengthened.These will help improve the dissemination of re-search. Two other aspects of the internal dissemina-tion process could also be improved. First, more ap-propriate dissemination vehicles should be created(see paragraphs 127–29) and second, the overall

31


strategy behind the internal dissemination of Fundknowledge should be reconsidered (see paragraphs130–31).

127. Much of the research conducted in the Fundis disseminated to economists, management, and theExecutive Board in the form of Working Papers. Be-cause they are often very technical and difficult toread, people in operations and the Executive Boardmay perceive Working Papers as having limitedvalue from an operational perspective, even thoughthis may not be the case.

128. Furthermore, in academia and in many re-search organizations, Working Papers are meant tobe preliminary reports, and are intended to solicitcomments and criticisms from readers before theyare revised and finalized. In the Fund, in contrast,Working Papers are often considered to be an endproduct of research. Working Papers represent boththe strongest and the weakest of the Fund’s re-search (not all research will be successful). Thestrongest should be polished further and the weak-est should be abandoned at the Working Paperstage. Treating Working Papers as final productsand disseminating them to people in operations andthe Executive Board, who are unlikely to have timeto read them carefully and sort out the successesfrom the failures, can erode support for research bythe Executive Directors and operations people, whomight see the research as being weak, irrelevant,and wasteful.

129. Other methods of disseminating the informa-tion in Working Papers need to be considered.

130. Several staff thought that the Fund’s institu-tional memory could be improved. They indicatedthat they thought the Fund too often “reinventedthe wheel” because it did not effectively store theknowledge it had gained in the past, so it could notapply that knowledge to similar situations thatarose in the future and thereby avoid repeating pastmistakes.

131. The Fund has an electronic document data-base, which contains the titles and sometimes thetext of many Fund documents, but the people wespoke to did not think that the database alone wassufficient to achieve the knowledge transfer that theywere seeking.

Improvements to the way research is disseminatedoutside the Fund would help to build public sup-port for the Fund’s work and help convince policy-makers and the public in member countries of thesoundness of Fund policy advice.

132. It is critical that the Fund is perceived in theoutside world as an organization whose advice isbased on sound analysis. A good strategy for exter-nal dissemination of its research findings is essentialto this.

133. The Fund has successfully disseminatedsome of its policy analysis research. The World Eco-nomic Outlookand International Capital Marketsreport are both widely read. However, as Annex IIindicates, the Fund distributes a wide range of otherresearch products. Several outsiders found this con-fusing. They said that the large number of productscan make it difficult for readers outside the Fund tomake sense of the status of what they are reading, orto pinpoint what it is they want to read. This sug-gests a lack of cohesion in the marketing strategy forFund research products.

134. In addition, to successfully disseminate Fundresearch, researchers themselves must be involved inthinking about who their target audience is and howbest to reach them. The fact that Working Papers areoften considered to be an end product of research,but are not refined to reach the right target audienceoutside the Fund, suggests that the researchers couldplay a more active role in raising the profile of Fundresearch.

135. In contrast to other public policy organiza-tions, the Fund does not currently publish a policyjournal that disseminates the findings of research toan audience of policymakers and the general public.(However, the Fund has decided to issue an annualvolume of Policy Discussion Papers—which arenormally published individually—prior to the An-nual Meetings this year.) People in other public pol-icy institutions have told us that they have found thatin-house policy journals fill a niche that is not metby outside publications and have proved to be a suc-cessful way to feature the expertise of the organiza-tion and enhance its reputation outside.

136. The Fund currently publishes an academic-style economics journal, IMF Staff Papers. Publi-cation is restricted to articles written by Fund em-ployees, and until recently, the journal had a rightof first refusal on research papers produced in theFund.

137. There are now a large number of excellentacademic journals in the field of international eco-nomics, so the rationale for an academic Fund jour-nal is weaker than it was in the past (when fewerjournals of this type existed). Staff have told us thatthe publication procedures for IMF Staff Papersinthe past were often arbitrary, and many staff did notthink that the journal served the needs of the organi-zation, nor that it resulted in the publication of thehighest quality research.

138. However, Table 6 in Annex II indicates that,at least for the two sample years, articles publishedin Staff Papersare referenced at least as frequentlyas those in the World Bank Economic Review(theWorld Bank’s academic-style journal), but less thanBrookings Papers on Economic Activity (an acade-mic public policy journal). Tables 8a and 8b indicate

32


that there is no discernable trend in the number of ci-tations of Staff Papersover time.12

139. In any case, in response to staff ’s concerns,the procedures for publication of IMF Staff Papershave recently been overhauled and the journal isunder new management. In addition, the new editorplans to moveIMF Staff Papers in a more policy-oriented and less technical direction. We believe thechanges will improve the journal’s quality and rele-vance, but whether it will be of substantial value tothe Fund remains an open question.

33

12We attempted to do similar citation counts for the World Eco-nomic Outlook, the International Capital Markets report, Occa-sional Papers, and several Fund conference volumes. We do notreport these tables because we could not satisfy ourselves of theaccuracy of these counts and did not have the resources to con-duct a more thorough count.

140. In the recommendations below, we first lay outthe general principle(s) governing each recommenda-tion. Each recommendation also contains sufficientdetail to ensure that the concept presented is clear.However, the recommendations are not intended to beblueprints for implementation. Putting them into prac-tice successfully will require modification of some ofour specific suggestions, and more detailed specifica-tion of others. We expect and welcome adaptation ofthe details of our recommendations. It is our expecta-tion that the Executive Board will decide whether itagrees with the basic principles governing the recom-mendations, and leave it to Fund management to de-velop the details necessary to implement them.

141. The recommendations fall into two relatedsets. The first set contains what we consider to be thenine key, high-priority recommendations: these aresuggestions for change that we believe are necessaryto improve the effectiveness of the Fund’s researchactivities. The second set contains recommendationsthat supplement and reinforce the nine key ones.

142. Some of our recommendations directly ad-dress the Fund’s research activities. Others address is-sues in the overall organization of the Fund. While thelatter have a more indirect link to the objective of im-proving the Fund’s research activities, they do havean important impact on the resources and incentivesfor research. We believe that it is important to im-prove aspects of the wider environment in which theresearch process operates in order for the organizationto operate optimally. In laying out our recommenda-tions, we distinguish between the two types.

143. A key principle behind all our recommenda-tions is that for research to successfully meet theneeds of the Fund, it must be encouraged by creatingan environment conducive to the pursuit of creativeideas through appropriate incentives, accountability,and good management, and an avoidance of micro-management.

Key Recommendations

Recommendations 1 through 3 focus on ways to allo-cate the Fund’s scarce resources for research.

The first recommendation addresses the need for astronger coordinating mechanism to identify a re-search strategy and choose priority research pro-jects (discussed in paragraphs 56–59). It also ad-dresses the need for greater communication aboutongoing or planned research projects (discussed inparagraphs 73 and 74), and the need to enhance theincentives to conduct high-quality research (dis-cussed in paragraphs 94–108) by creating a mecha-nism for internal competition for resources for re-search products requiring additional resources.Furthermore, it addresses the need to increase staffinteraction with the outside world by providing addi-tional resources for conference participation (dis-cussed in paragraphs 82–86), to improve the visitingscholars program by increasing transparency, and toallow reallocation of resources to enhance the col-laboration between Fund staff and outside consul-tants (discussed in paragraphs 119–20).

Recommendation 1: Create a Committee on Re-search Priorities to assist in strategic planningand to support research activities in the Fund.

144. To improve the relevance, quality, and coor-dination of the Fund’s research, we recommend up-grading the role and responsibilities of the currentWorking Group on Fund Policy Advice, including:

• expanding its priority-setting responsibilities;

• giving it resources to allocate to specific re-search activities, and

• renaming it the Committee on Research Pri-orities (CRP) to better reflect its new role.

145. The CRPshould do the following.

• Identify research priorities for the Fundthrough an annual strategic planning processinvolving all departments. This would alsoinclude the commissioning of specific re-search papers. These priorities and specificprojects would set the agenda for the Fund’sresearch efforts in the year ahead. At an an-nual meeting, the Executive Board and man-agement would review the research done inthe previous year in relation to that year’s

Section IV Recommendations for Change

34


Recommendations for Change

agenda, and discuss and approve the agendaproposed by the CRPfor the coming year.

• Encourage staff members, either individuallyor in partnership, with approval and time allo-cation from their departmental management,to submit proposals to the CRPseeking finan-cial support for specific research projects(money for data collection, research assis-tance, travel, etc.). The CRPwould evaluateand compare research proposals, and decidewhich projects should be allocated additionalresources (guided by the Committee’s annualstatement of research priorities). This wouldcreate a competitive process for submissionof research proposals, and their transparentand fair evaluation.13

• Through a transparent process, make deci-sions on inviting visiting scholars throughoutthe Fund and on projects involving contractswith outside researchers.

• Be responsible for monitoring the projects itauthorizes and evaluating their output. TheCommittee could make use of outside consul-tants to evaluate project output.

146. The members of the Committee on ResearchPriorities should be appointed by management andconsist of staff chosen primarily for their strong re-search interests (and not necessarily on the basis ofseniority). The Committee would normally bechaired by the Director of the Research Department,although Management should retain discretion onwhom to appoint.

147. Management should encourage the submis-sion of proposals to the Committee by acknowledg-ing a department’s success in obtaining fundingfrom the Committee in the annual performance re-views of department directors. The specific terms ofreference of the Committee would need to be furtherelaborated by management.14

148. The budgets for the various activities of theCommittee on Research Priorities should be decidedby management and should come from reallocatingsome existing resources from departments to the CRP.

The second recommendation is designed to en-hance the Fund’s commitment to research and en-sure that staff have sufficient time to conduct high-quality research (discussed in paragraphs 65–68).

Recommendation 2: Introduce explicit depart-mental targets for staff time allocated to re-search activities.

149. Research cannot be treated as a residual ac-tivity if the Fund is to maintain its analytical capac-ity. Research produced for some Article IV consulta-tions and other policy analysis research productssuch as the World Economic Outlook, the Interna-tional Capital Marketsreport, G-7 notes, etc. has anestablished place in the organization. However, re-search above and beyond these products must beprevented from being squeezed out by operationaldemands. The amount of research conducted in theFund should also be more transparently recorded indepartmental budgets. We recommend that depart-ment directors, in consultation with management, setaside a percentage of staff time to be allocated to department-sponsored research, beyond that con-ducted as part of Article IV consultations or otherpolicy analysis research products, and to indepen-dent research.15

150. The amount of time allocated to staff forthese two categories of research would vary acrossdepartments, depending on departmental priorities,naturally with a higher allocation for the ResearchDepartment. The time allocation would be explicit indepartments’budgets, and department directorswould be held accountable for meeting this target.

151. Given the current resource constraints, thesuccess of this recommendation depends on the abil-ity to free up staff time to conduct research over andabove that produced for Article IV consultations andpolicy analysis research products. While Fund staffclaim that they are currently too stretched for re-sources to put additional time aside for research, webelieve that resources can be freed up and reallocatedby implementing the recommendations we haveidentified below—in particular by reducing researchactivities with low value added and by increasing theefficiency of the research process. However, the Ex-ecutive Board might also consider whether additionalresources need to be allocated to research.

The third recommendation addresses the need for adifferent mix of research output in the Fund (dis-cussed in paragraphs 44–49).

Recommendation 3: Shift the mix of researchtoward topics that add most value.

35

13The CRPcould consider inviting, possibly on a case-by-casebasis, outside academics to its meetings, in order to use their ex-perience in making decisions.

14The purpose of the CRPis to ensure some coordination andprioritization to exploit the synergies from decentralized research.The CRPshould not become another layer of hierarchy or overlycentralize the research process. Management should monitor theworkings of the CRPto make sure that this does not happen.

15Staff need to be given some time to independently pursuetheir own research interests without approval of their projects.Giving staff this time to pursue their own intellectual curiosity isa strong incentive to produce quality research and to maintaintheir human capital by keeping abreast of developments in theirown fields of interest. This research should, however, be evalu-ated ex post for its relevance to the Fund’s work. See Recommen-dation 5 below.


152. The current mix of research fails to ade-quately distinguish between topics where the mar-ginal value of Fund research is particularly high, andothers where Fund research adds little value to whatgoes on outside the Fund. For example, excellent re-search already takes place outside the Fund on topicssuch as the sustainability of the social security sys-tem in Europe.

153. There are, in particular, two areas in whichthe Fund has a strong comparative advantage in itsresearch:

• developing and transition country research forthose countries for which there is a lack ofgood outside work (for instance, in Africa), and

• cross-country research—research that drawspolicy-relevant lessons from cross-countrycomparisons based on in-depth knowledge ofseveral countries.

154. We recommend that the Fund shift the mix ofits research activities to incorporate more of thesetypes of research, focusing on topics that are at thecore of the Fund’s mandate.

155. Furthermore, recent developments havehighlighted the need for the Fund to better under-stand the workings of the domestic financial sectorin member countries and of the global financial sys-tem, given the important role of the IMF in ensuringthe stability of the international monetary and finan-cial system. We therefore recommend that an addi-tional specific priority of Fund research be financialsector research. We observe that the Fund has re-cently been putting more resources into this activity.We encourage it to continue in this direction.

156. Management, department directors, and theCommittee on Research Priorities should each takeresponsibility for ensuring that this shift to more de-veloping and transition country, cross-country, andfinancial sector research occurs.16 Department direc-tors can ensure that background research for ArticleIV consultations on a specific country that now ap-pears in the “Selected Issues” paper included in someArticle IV documents is restricted to cases where itprovides substantial value added. Research on topicsthat are already adequately studied by academics orresearchers in other policymaking institutions shouldnot be undertaken. This implies that there could befewer economists working on country-specific issuesin industrial countries, who may then be able to beredeployed to other areas of the Fund where desirableresearch is not currently conducted.

157. The Committee on Research Priorities (dis-cussed above) can encourage reallocation through itspriority setting and project approval processes.

Recommendations 4 through 6 focus on providing abetter incentive structure to promote high-quality research.

The fourth recommendation addresses the need toimprove collaboration among departments (dis-cussed in paragraphs 73–74) and to increase incen-tives for researchers in functional departments to beinvolved in the policy development process (dis-cussed in paragraphs 104–108).

Recommendation 4: Create incentives to im-prove collaboration among departments and toencourage researchers to contribute to policywork.

158. Researchers, particularly those in the ResearchDepartment, need to be involved in policy work origi-nating in other departments, not only to help improvethe quality of this work, but to stimulate researchideas and to increase the relevance of their research.To achieve this, we recommend that the annual per-formance reviews for staff engaged in research shouldtake into account whether a researcher has providedvaluable service to other departments, based on inputfrom these departments. Such services would includeinvolvement in large-scale policy development pro-jects, but also mission and review work.

159. Participation by functional department staffin policy development and mission work might befurther enhanced by creating an informal and limitedinternal market for the services of functional depart-ment economists. We recommend that the Fund con-sider advertising requests for assistance for majorpolicy development projects17 and mission work onthe Fund’s internal website.18 Staff members withappropriate expertise would apply to be included inthe project or mission, with the agreement of theirdepartment.

The fifth recommendation addresses the need to in-crease the incentives to conduct high-quality re-search (discussed in paragraphs 97–100).

Recommendation 5: Improve the assessmentof research quality in the annual performanceevaluation system.

160. The performance assessment for researchstaff needs to be based (more systematically than ap-

36

16We recognize that the Fund has, in recent years, greatly en-hanced its research capabilities on transition countries and is alsoincreasing the number of projects devoted to developing countryand financial sector research. This recommendation reinforcesthis trend.

17With limited exceptions approved by management on thebasis of sensitivity.

18The posting of requests on the Fund’s internal website wouldsupplement the current informal process in which departmentsapproach other departments directly for assistance on policywork.


pears to be the case at present) on a serious assess-ment of the quality of their research, and not merelyon the number of papers produced.

161. High-quality research at the Fund should beresearch that is relevant to the design of Fund poli-cies, or adds to the stock of knowledge relevant forthe Fund’s operations. Incentives to conduct high-quality research come from its recognition bothwithin the Fund and outside it. The annual perfor-mance review for staff involved in research shouldtherefore take into account the following internaland external signals of quality and relevance.

• Is the research judged to have contributed sig-nificantly to the Fund’s mission?

• Has the research been perceived to be of highquality by departmental management?

• Has the research been directly useful in theoperational work of the Fund?

• Has the research been presented at a highlyregarded conference or published in a high-quality academic journal or in one of theFund’s official publication vehicles (i.e., ex-cluding the Working Papers series)?19

• Has the research been favorably received bythe external review process (suggested laterin this document)?

162. In departments whose primary focus is notresearch, department directors should consider ap-pointing one staff member to assist departmentalmanagers in evaluating the quality of the researchactivities of their staff.

The sixth recommendation addresses the need to in-crease accountability of staff involved in research,motivate them, and provide learning experiences forthem (discussed in paragraph 102).

Recommendation 6: Give all staff, no matterhow junior, opportunities to present their re-search products to management and the Exec-utive Board.

163. Making presentations to management andthe Executive Board is crucial to staff for their de-velopment into first-rate policy economists. It alsohelps to improve staff morale, which is important forretention of the best and brightest. Furthermore,those closest to a research product have the best un-derstanding of it and so should be given the opportu-nity to present it. We recommend the following.

• The Fund should adopt a convention that theprimary author or authors of a research prod-

uct should always be the ones to present it tomanagement or the Executive Board (unlessthey opt not to do so). This includes both dis-cussions of board papers on research topics,and individual items in the World Economicand Market Development presentations. Ofcourse, a senior staff member should also beavailable at the presentation to support the de-partment’s staff if needed.

• As one example, we suggest that in the WorldEconomic and Market Development presen-tations made to the Executive Board, the Di-rector of Research should give an overall in-troduction, outlining the topics to be coveredand presenting his or her assessment of Fundpolicies. This would be followed by individ-ual presentations by staff, and then an infor-mal question and answer period for each pre-sentation. This structure has been extremelysuccessful in public policy institutions inwhich some of the Committee members havebeen involved.20

The seventh recommendation addresses the need toensure that a leader of the Research Departmentcreates a culture that supports policy foundation andpolicy development research and engages the de-partment in the policy development process (dis-cussed in paragraphs 87–93).

Recommendation 7: Management should givea clear mandate to the Director of the Re-search Department to be both an active re-search leader and economic counselor to theFund.

164. A Director of the Research Department playstwo distinct roles in the organization, which in turnrequires that he or she possess two equally importantcharacteristics:

• The Director of Research is the leader of theFund researchers. To lead effectively, the Di-rector needs to be actively engaged in the re-search process by creating an environment inwhich everybody, including the senior staff,is encouraged to express their views openly,considers it normal practice to attend semi-nars and comment on their colleagues’re-search, and writes research papers as part of

37

19This will not be a relevant criterion for all pieces of Fund research.

20There might be a concern that the quality of presentationswill be inadequate when given by more junior staff. In our experi-ence, this has rarely occurred in public policy institutions withwhich we have been affiliated. Staff have tremendous incentivesto give a good presentation because it has a beneficial impact ontheir careers. Furthermore, giving presentations to the Board cre-ates strong incentives for staff to improve their presentationskills.


his or her job. Moreover, because the Com-mittee on Research Priorities (describedabove) will normally be chaired by the Direc-tor of the Research Department, such a per-son will play a central role in the design of re-search projects throughout the Fund.

• The Director of Research is the Fund’s Eco-nomic Counsellor, and as such is expected tobe a source of independent advice to the Fundon policy issues, to be able to integrate theideas of research staff into the design of Fundpolicies and operations, and to convey suchideas effectively to policymakers in the orga-nization as well as outside.

The eighth and ninth recommendations focus on issues that have important effects on research ac-tivities but that also affect the organization as awhole.

The eighth recommendation addresses the need toimprove the performance evaluation system andraise the accountability of staff (discussed in para-graphs 95–96 and in Box 2).

Recommendation 8: Create a more effectiveperformance evaluation system.

165. The ability to discriminate between high andlow performers is an essential feature of a perfor-mance evaluation process and of the award of meritincreases in any well-managed organization. It is es-sential that poor performers be encouraged to leavethe organization with a serious threat of termination.

166. The present performance evaluation systemin the Fund—in which over 99 percent of staff econ-omists are meeting or exceeding performance stan-dards, and termination for poor performance is infre-quent—clearly does not have the two essentialfeatures identified above. We understand that a re-view of the issues surrounding performance man-agement is currently being conducted by the Officeof Internal Audit and Inspection. We welcome thisreview and recommend that one outcome of thisprocess should be a change in the performance eval-uation system to incorporate the two essential fea-tures indicated in the paragraph above.

The ninth recommendation addresses the need to re-design the review process to both increase the effec-tiveness of researchers in this process and to make itmore efficient (discussed in paragraphs 115–118).

Recommendation 9: For departments otherthan the Policy Development and Review De-partment, the Fund should consider how to re-duce unnecessary internal review of Fund workand avoid formal written comments where in-formal communication would be adequate.

167. We are concerned that the review process isnot operating as effectively as it could to bring in-sights from researchers in functional departmentsinto the policy advice process. We also consider thatthe review process could operate more effectivelywith less time devoted to it. We understand that sys-tematic studies of the review process are currentlyunder way. We welcome these studies and wouldlike to highlight the following issues for considera-tion in these studies.

• Changes in the way review is conducted. Asseveral staff members told us, the best ex-change of ideas and constructive critiques ofeach others’research in the Fund occurs in in-formal discussions over coffee or a meal in thecafeteria. The simple point is that a successfulpolicy institution is one in which people spenda significant amount of their time discussingideas with each other at the formative and pre-liminary stage of work rather than in writingcomments on a piece of work, in its relativelyfinal form, from behind closed doors.

We therefore consider that it would be moreappropriate in the review process for a depart-ment to circulate an outline of its document(i.e., at an earlier stage of development than ispresently the case) to other departments. Theoutline should include all key facts, figures,and preliminary conclusions. Departmentsshould be invited, but not required, to makecomments. Comments should be communi-cated informally (either orally or by e-mail),rather than by formal written memoranda(which is the current norm). Managementshould provide incentives in annual perfor-mance reviews to ensure that outlines are cir-culated at an early stage and that the depart-ment is prepared to discuss the documentsopenly with other departments.

In specific cases where Management thinksthat more formal review is of crucial impor-tance to the Fund, a seminar based on a draftoutline should be the primary means of re-view. This brings researchers into the reviewprocess earlier (before positions are en-trenched), and allows for better interactionbetween authors and reviewers than in thecurrent written process.

The openness of a seminar is a more appropri-ate and productive way to bring commentsfrom researchers to bear on important issues. Itshould also help reduce trivial comments be-cause the person making them is more directlyaccountable. If a reviewer is unable to attendthe seminar, he or she could still communicate

38


his or her comments and suggestions verballyto those writing the paper/report.

If significant disagreements persist betweendepartments, written comment could then beused to document differences and refer themto management.

• A reduction in the amount of reviewing. Un-less a department (other than the Policy De-velopment and Review Department)21 hassomething of significant value to add, itshould not make comments. The absence ofcomments by departments (other than the Pol-icy Development and Review Department)should not be viewed as a sign that a depart-ment is not doing its job properly. Manage-ment should monitor departments’progress incutting out unnecessary review.

Supplementary Recommendations

168. The 13 supplementary recommendationsbelow are designed to provide support for the 9 keyorganizational changes that we have recommendedabove. They are grouped into four categories: (1) changes in the culture, incentive structure, and ac-countability mechanisms; (2) changes to improve thedissemination of research; (3) changes in the alloca-tion of resources in the organization to improve effi -ciency; and (4) establishment of an external reviewand monitoring process.

Changes in the Culture, Incentive Structure,and Accountability Mechanisms

Recommendation 10 addresses the need to encour-age greater interaction with the outside world (dis-cussed in paragraphs 82–86); Recommendation 11addresses the need to increase morale and account-ability of the junior staff by ensuring that only signif-icant contributors are listed as authors on researchproducts (discussed in paragraph 103); Recommen-dation 12 addresses the need to increase incentivesfor collaboration between the Fund and the WorldBank (discussed in paragraphs 75–76); Recommen-dation 13 addresses the need to bring more flexibil-ity into the hiring procedure for young economistssuitable for the Research Department (discussed inparagraph 69); and Recommendation 14 addressesthe need to reconsider the current managementstructure in the Research Department to improve ef-

ficiency and the environment for research (discussedin paragraph 123).

Recommendation 10: Encourage participationin relevant external conferences.

169. Participation by Fund researchers in externalconferences is an important way of exposing them tooutside ideas and having their research seen and crit-ically examined by outsiders. Participation in rele-vant external research conferences needs to be fur-ther encouraged in the organization.

170. To encourage conference participation werecommend the following.

• As a departmental objective, departmentsshould explicitly allocate time to participatein conferences relevant to the Fund and en-sure that their travel budget is sufficient to ac-commodate this.

• Researchers should be allocated time to at-tend relevant conferences, particularly whenthey are asked to make a presentation or par-ticipate as a discussant. A high priority shouldbe given to achieving this, so that operationalresponsibilities do not crowd out attendance.

• Presentations and participation as a discus-sant in relevant conferences should be re-flected in annual performance reviews and berewarded.

• The Committee on Research Priorities shouldbe provided with an additional pool of re-sources to finance, at its discretion, confer-ence participation in cases where the depart-mental travel budgets are exhausted.

• Department directors should be held account-able by management for meeting conferenceattendance objectives.

Recommendation 11: Put only the names of sig-nificant contributors on Fund publications.

171. To improve morale of junior staff and increaseaccountability for the quality of their research product,we recommend that only the names of individuals whohave made a significant contribution to the researchshould appear as authors on Fund publications and pa-pers to the Executive Board. Staff whose contributionwas limited to providing comments on a draft shouldnot be deemed to have made a significant contribution.There should be no presumption that senior staffshould be listed first on coauthored publications sim-ply because of their seniority.

Recommendation 12: Improve collaborationbetween World Bank and Fund researchers.

172. There are large potential synergies betweenresearch activities at the World Bank and the IMF. In

39

21The Policy Development and Review Department has the or-ganizational responsibility to certify the paper’s contents as rep-resenting the Fund’s position. Thus, there is clearly a need for thisdepartment to continue to make written comments.


areas where both the Fund and the Bank have an in-terest in and conduct research on the same issues(for example, research on financial sector reform),collaboration could improve the quality of analysisin both institutions. In areas where one institutionspecializes and the other does not (for example, theWorld Bank in environmental issues, and the IMF inmonetary policy), gains in efficiency could also beachieved by making use of each other’s expertiserather than trying to duplicate it.

173. Collaboration occurs naturally when re-searchers are encouraged to talk to each other. Werecommend that new vehicles be created to encour-age this process.

• A joint weekly (or fortnightly) research semi-nar should be established by the Research De-partment in conjunction with their appropri-ate counterparts in the World Bank. Theseminar would feature presentations by stafffrom both institutions or presentations by out-side experts whose research is relevant toboth institutions.

• The World Bank and the Fund might alsoconsider jointly running an annual researchconference, organized on the Fund side by theCommittee on Research Priorities, in whichprominent academics and staff members fromboth institutions participate. An annual eventalong the lines of the National Bureau of Eco-nomic Research (NBER) MacroeconomicAnnual Conference would go a long way to-ward improving the morale of Fund re-searchers and enhancing the reputation of theFund and the Bank.

Recommendation 13: Introduce more flexibil-ity into the hiring procedure for entry-leveleconomists.

174. Attracting the best young researchers is par-ticularly important to the Research Department,which differs from other departments in that re-search is a large component of an economist’s job inthe Research Department. The hiring policies forentry-level economists must be flexible enough toensure that economists with strong research skillscan be hired for the Research Department.22

175. We recommend the following.

• The pool of candidates selected for the sec-ond round of interviews in the EconomistProgram should include some candidates withstrong research interests.

• The Fund should make a commitment tosome of those candidates who wish to work inthe Research Department (and are suitable forthe Department) that they will be placed inthe Research Department after their success-ful completion of two years in the EconomistProgram. (This appears to be critical to at-tracting some of the best young researchers.)

• Candidates with strong research interests whoare interested in a commitment to being placedin the Research Department should be requiredto present their research at a seminar as part oftheir interview process, and the opinions of ac-tive researchers should be solicited and takeninto account in the hiring decision.

Recommendation 14: Consider streamliningthe management structure in the Research Department.

176. Multiple layers of management can stifle cre-ativity as well as result in substantial inefficiencies.Successful research operations have a relatively non-hierarchical management structure. Adopting a struc-ture with less reporting layers has become more com-mon in public policy organizations, and may enhancethe effectiveness of the Research Department.23 Wetherefore recommend that the Research Departmentconsider alternatives to the current managementstructure as a means of increasing collegiality in theDepartment, enhancing intellectual exchanges, andmaking efficiency gains.24

Changes to Improve the Dissemination ofResearch

Operational staff and management are often too busyto read all research output, particularly long papers,and select that which is most relevant to their needs.

40

22In a poorly integrated organization, creating a special hiringprocedure in a research department has the potential to isolate thedepartment. However, successful research departments in publicpolicy organizations are those in which there are some individu-als who focus on research, but the department ensures that thereare strong incentives in place to encourage those researchers toprovide value to the operational parts of the organization, and toexit them when they fail to do so. Recommendation 4 addressesthis by providing greater incentives for researchers to be involvedin the operations of the Fund.

23In a research unit headed by one of the Committee members,such a change in structure produced substantial increases in effi -ciency because the time devoted to management activities and mul-tilevel editing of written documents decreased dramatically. It alsoled to substantial improvements in the quality of research outputbecause researchers were now held more accountable for their finalproduct and did not feel that they had to make their products lesscontroversial to please the many layers of management.

24We have neither the time nor the expertise to design a de-tailed proposal for change, which would also need to considerany proposed changes in the wider context of the general organi-zational structure of the Fund. We see value in bringing in exter-nal experts to consider this issue.


Authors of research, and the Fund as a whole, needto think about ways to make research more accessiblein order to ensure its absorption into policy work.Recommendations 15 and 16 address the need to dis-seminate research effectively around the Fund (dis-cussed in paragraph 126); and Recommendation 17addresses the need to provide additional opportuni-ties for young staff to make presentations to the Exec-utive Board, thereby increasing accountability andmotivation (discussed in paragraph 102).

Recommendation 15: Write and disseminatenontechnical summaries of highest qualityand most relevant research.

177. In order to more effectively disseminate re-search ideas throughout the institution we recom-mend the following.

• The Front Office in each department should,on a periodic basis, select a fraction of researchpapers (Working Papers, Policy Discussion Pa-pers, Occasional Papers, papers submitted tooutside journals) with interesting and/or rele-vant conclusions, and require that these besummarized by the authors. These summariesshould be written for a nontechnical audience,making them accessible to educated layper-sons (along the lines of the Economic Focussection in the Economistmagazine). Theyshould be more substantial than current ab-stracts, but short enough for busy people toreadily absorb the key facts and conclusions—probably less than five pages.

• These summaries should be disseminated toall departments and to individual members ofthe Executive Board or management if theyso choose.

• Assistance from the editorial/writing unit ofthe External Relations Department should bemade available to assist staff in writing thesenontechnical summaries.

Recommendation 16: Treat Working Papers aspreliminary.

178. The purpose of issuing Working Papers shouldbe primarily to stimulate discussion with other re-searchers. To ensure that Working Papers are treatedas preliminary, and not end products of research norrepresentative of Fund views, we recommend that theFund put more distance between its official views andthe views expressed in Working Papers.

• Working Papers should no longer be autho-rized for distribution by Front Offices or divi-sion chiefs, which is sometimes interpreted assuggesting that they have been approved bythe Fund.

• The following sentence should be added tothe current disclaimer: “This Working Paperis preliminary and is for discussion purposesonly.”

• Working Papers should only be minimallyscreened for quality but should be screenedby the External Relations Department, withthe assistance of the department where theWorking Paper originated, prior to releasefor confidentiality issues and problematiclanguage.

Recommendation 17: Create a new vehicle fornonsenior staff to make presentations to Man-agement and the Executive Board.

179. The Executive Board should have more face-to-face exposure to good Fund research. We recom-mend that periodically, perhaps four times a year, aBoard meeting be scheduled at which staff makepresentations of their research work. (In our commit-tee’s experience, four presentations per meetingshould be the maximum.) The topics for presentationcould be chosen by the Executive Directors them-selves, or by the Committee on Research Priorities.The Board meeting would be informal and wouldnot require formal Board papers.

180. We understand that the Executive Board is al-ready under significant time pressure, and thatadding these additional meetings will create even fur-ther pressure. However, these meetings should be animportant priority for the Executive Board becausethey will help the Board to provide input into the pri-orities for future research. They are also a more ef-fective and efficient way of disseminating research toExecutive Directors than the current system of pro-viding them with Working Papers, and they will helpsend a signal to staff that research is valued in theFund.

To successfully disseminate research outside theFund, the Fund must have a coherent disseminationstrategy, and researchers themselves must be in-volved in thinking about who their target audienceis and how best to reach it. Recommendation 18 addresses the need for the Fund to enhance thereputation among policymakers and the public in member countries (discussed in paragraphs132–35).

Recommendation 18: Improve disseminationof research to nontechnical audiences outsidethe Fund.

181. Improving the dissemination of the Fund’sexpertise and research to nontechnical audiencesoutside of the institution is of great value in develop-ing a constituency for the Fund’s work. It is impor-tant to ensure that nontechnical outsiders have ac-

41


cess to appropriate publications, and that there is acoherent strategy for dissemination of these publica-tions (on this latter point, the purpose and status ofthe current set of publications seems to generatesome confusion).

182. We understand that the strategy behind theFund’s nontechnical publications is currently beinglooked at by external consultants as part of a wider re-view of the Fund’s external communications strategy.If the review does not consider this issue in sufficientdepth, we recommend that a more careful review takeplace, which considers the following issues.

• The overall dissemination strategy, includ-ing whether there are too many publicationvehicles.

• Publication vehicles that have been success-ful in other public policy institutions. Forexample, if the changed orientation of theIMF Staff Papers journal is not sufficient forcommunicating to policymakers and thegeneral public, the Fund might consider cre-ating a separate policy journal. Such a jour-nal must be set up with a serious peer reviewprocess and might even make use of promi-nent outside experts.

• The wider issue of greater researcher in-volvement in some nontechnical externalpublications. Currently, the impetus behindtwo nontechnical publications—Financeand Development and the Economic Issuesseries—comes largely from the External Re-lations Department. We believe researchersthemselves should be more actively engagedin the process:

(a) The External Relations Departmentshould consult with the Committee on Re-search Priorities as to what research prod-ucts might be appropriate for the nontech-nical publications. When this research iswritten for these publications, the authorof the original research should be respon-sible for writing up a nontechnical versionof the original research with assistancefrom the External Relations Department.

(b) Researchers should be encouraged tosubmit work to appear in these nontechni-cal publications. Researchers should begiven incentives to have their work pub-lished in these vehicles by receiving creditfor these publications in their annual per-formance reviews and merit increases.

183. An additional advantage of engaging re-search staff in writing these nontechnical papers isthat it will improve their ability to communicate

with noneconomists. This will help them to becomebetter policy economists.

Changes in the Allocation of Resources to Free Up Staff Time

Recommendation 19 addresses the need to createmore time for economists to focus on research issuesby increasing the number of research assistants (dis-cussed in paragraphs 112–14).

Recommendation 19: Increase the number ofresearch assistants relative to economists.

184. The lack of research assistants reduces theproductivity of researchers in the Fund. The Fundhas recently implemented changes to increase thenumber of research assistants and change the mix.We welcome these changes and encourage acceler-ation of the rate of change. We recommend that theFund further increase (substantially) the number ofresearch assistants in the organization. New hiresshould primarily be young college graduates with arelevant background, hired on fixed-term, nonre-newable contracts. This will increase the Fund’shead-count, but should reduce the need for econo-mist staff, and therefore could be operated in such away as to ensure it is roughly budget neutral. (Forexample, one economist could be traded off for,say, three research assistants.)25

185. Increasing the number of research assistants,and paying for it by reducing the number of econo-mists, is likely to increase the overall efficiency ofthe research process.

Establishment of External Review andMonitoring Processes

Recommendations 20–22 address the need to openup the Fund to ideas from the outside world (dis-cussed in paragraphs 82–86) and to increase ac-countability of the Fund’s research through the es-tablishment of external review and monitoringprocesses.

Recommendation 20: Create an ongoing ex-ternal review process for research products.

186. External review of research products hastwo important benefits. First, by opening up Fundresearch to outside scrutiny, it makes it more likelythat that Fund research will incorporate the latestideas and developments from outside, thereby pre-venting insularity. Second, external review will in-crease the accountability of Fund researchers, par-

42

25This complication would not arise if the Fund had a dollarbudget rather than a head-count budget for staff.


ticularly if the results of the review are made pub-lic.

187. We recommend the following.

• On an annual basis, the Fund should contractwith outside experts, including academics, toread and comment on the individual productsof the research projects that have been ap-proved by the Committee on Research Priori-ties. These comments should then be pub-lished on the Fund’s external website andused by the Committee on Research Prioritiesand Management to analyze the success of re-search projects.

• The Committee on Research Priorities mightalso contract to have a selection of other re-search products from throughout the organi-zation subjected to external review.

Recommendation 21: Monitor progress on im-plementing the recommendations in this report.

188. To ensure the effective implementation ofthose recommendations that the Executive Board

approves, the Board needs to monitor the progressof implementation. We recommend that one yearfrom the date of this report, a follow-up report bymanagement and staff, perhaps with the input of anindependent external advisor, be submitted to theBoard for discussion. At that time the Board can as-sess whether progress on these recommendationshas been sufficient and what further steps need tobe taken to improve the research process.

Recommendation 22: Create periodic, general,external reviews of research activities.

189. Although an external review of research prod-ucts along the lines of our Recommendation 20 willincrease the accountability of Fund research, it will,of necessity, be narrowly focused on individual re-search products. A more general external reviewshould help the Fund evaluate whether the researchprocess is being managed properly, whether the re-sources devoted to research are appropriate andwhether research activities serve the operationalneeds of the Fund. We recommend that the ExecutiveBoard commit to another external review of research

43


activities within five years. This should be part of anongoing, regular process of external reviews, both ofresearch and of the Fund’s other major activities.

1. Purpose of the Evaluation

The Executive Board of the International Mone-tary Fund has decided to request an independent ex-ternal evaluation of the Fund’s economic researchactivities. The purpose of the evaluation is to assesswhether economic research in the IMF contributeseffectively to the achievement of the Fund’s objec-tives. For this purpose, the evaluation will assess theappropriateness of the present scale and organizationof research activities, the way in which the level ofresources and economic research programs are cho-sen, and how they relate to the overall work of theFund. The evaluation will also seek to assess thequality and the added value of different aspects ofthe Fund’s economic research and to appraise itsutility in the Fund, among its member countries, andwithin the wider economics community.

2. Focus of the Evaluation

The evaluation will focus on all aspects of theFund’s economic research activities and will be car-ried out by three independent external experts, as indi-cated in Section 3 below. The experts are requested toconsider five broad topics in their evaluation.

a. The definition of economic research in theFund.The boundaries between research and op-erational work are not clear-cut since much ofthe staff ’s regular work on surveillance and theuse of Fund resources involves elements ofresearch.

b. The objectives of the Fund’s economic researchactivities. Why does the Fund do research?Have the reasons changed over time? Are thecurrent objectives the right ones? How mightthe objectives of the Fund’s research activitiesevolve over the medium term?

c. The organization of the Fund’s economic re-search activities.How are decisions made about

the topics for research and the resources devotedto research and how are these related to the workprogram? How best should research work relateto operational work in the Fund? Is the presentdistribution of research time across departmentsthe most appropriate?

d. The agenda and focus of the Fund’s economicresearch.What is the value added by the Fund’sown research activities, both within the Fundand externally? What should determine whetherthe Fund (rather than the academic communityor other international institutions) undertakesspecific research and how deeply? Does the re-search utilize effectively the wealth of informa-tion to which the Fund has access? Is there anappropriate balance in the Fund between re-search in theoretical economics and research onmore operational topics? Should more re-sources be allocated to one or the other?

e. The influence of the Fund’s economic research.To what extent does the Fund’s research influ-ence its policymaking and operational work?How is the quality of Fund research perceivedby relevant interested parties and to what extentdoes it have influence in Fund member coun-tries, in other international institutions, andwithin the academic community? What is thebest way of publicizing the research (the role ofconferences and seminars; the role of the publi-cations concerning the World Economic Out-look and International Capital Markets report;the role of Staff Papers; the accessibility ofWorking Papers; etc.)?

In focusing on the above topics, the experts maywish to be aware of the following more specificquestions that are of interest to Executive Directors:

(i) What incentives do Fund staff have for work-ing on economic research? Is freedom of re-search preserved?

(ii) Are there any major areas of research at pre-sent undertaken by the staff whose valueadded could be regarded as insufficient? Arethere major omissions in the Fund’s researchagenda?

(iii) How useful is the visiting scholar program?Should research agendas be coordinated with

44

Annex I Terms of Reference

December 4, 1998

Annex I

other entities? Could more research be donein partnership with others or be contractedout?

(iv) How important is it for Fund staff to continueundertaking theoretical and applied researchas a means of maintaining their human capi-tal? In seeking to enhance the human capitalof staff, does the Fund provide an appropriatemix of opportunities to its staff to receivetraining and to do research work?

(v) What internal or external mechanisms exist,or should exist, for ongoing evaluation ofFund economic research activities?

3. Evaluators and their Independence

Professors Francesco Giavazzi, Frederic S.Mishkin, and T.N. Srinivasan have agreed to con-duct the evaluation and to submit a joint report;Professor Mishkin will serve as chair. They shallconduct their work freely and objectively and shallrender impartial judgment and make recommenda-tions to the best of their professional abilities. Attheir full discretion, the evaluators may wish totake into account the views of member country au-thorities, academic experts, representatives of otherinternational organizations, and Fund ExecutiveDirectors and staff.

4. Access to Confidential Informationand Protection of Confidentiality

a. The evaluators shall have access to informationin possession of the Fund as needed for carryingout the evaluation. This may include, but willnot necessarily be limited to, access to staff re-ports and other publications, internal memo-randa and studies, existing databases, relevantcommunications with management, as well asminutes of Executive Board proceedings. TheChairman of the Evaluation Group of ExecutiveDirectors (Evaluation Group) shall make allnecessary arrangements to facilitate and assistthe procurement by the evaluators of relevantinformation in possession of the Fund.

b. The evaluators undertake not to disclose, de-liver, or use for personal gain or for the benefitof any person or entity without the consent ofthe IMF, any restricted or confidential informa-tion in possession of the Fund that they receivein the course of the evaluation. The Chairmanof the Evaluation Group will request an appro-priate officer of the Fund to review the draft

evaluation report with the purpose of pointingout to the evaluators any inadvertent disclosureof restricted or confidential information.

c. The evaluators are free to request informationfrom country authorities and other sources out-side the Fund as deemed appropriate.

5. Evaluation Report: Publication,Executive Board Consideration, andComments

a. The Fund reserves the exclusive right to publishthe report, and the evaluators undertake not topublish any part of the report separately.

b. In accordance with generally accepted prac-tices for the conduct of audits and evaluations,the Chairman of the Evaluation Group will en-sure that those whose actions and advice arethe subject of evaluation shall have the oppor-tunity to respond to relevant parts of the evalu-ation report in draft form, as well as in finalform. The evaluators are free to take accountof, or ignore, any comments on the draft eval-uation report.

c. Comments on the final evaluation report shallbe considered part of the official record. If theExecutive Board decides to make public thefinal evaluation report, it may also decide tomake public the comments thereon, includingthe conclusions of the Executive Board consid-eration of the report.

6. Resources and Timing

The budget for the external evaluation of theFund’s economic research activities shall not exceedUS$220,000 (excluding any support from ExecutiveDirectors or Fund staff that might be requested bythe evaluators); within this total, and in consultationwith the Chairman of the Evaluation Group, theevaluators may arrange for research assistance sup-port. The Chairman of the Evaluation Group willmake arrangements to assist with any logistical or li-aison support from Executive Directors or Fund staffrequested by the evaluators.

The evaluators shall be provided with a contractfor contractual employment, on terms and conditionsapproved by the Chairman of the Evaluation Group.The “Terms of Reference of the External Evaluationof the Fund’s Economic Research Activities,” datedDecember 4, 1998, shall be attached to the contractand acceptance of the contract by the evaluatorsshall also mean acceptance of the “Terms of Refer-

45


ence.” The contract will expire with delivery of theevaluation report and its consideration by the Execu-tive Board, or if the Executive Board determines thatthe contract should be terminated for other reasons.

The evaluators will begin work in January 1999;completion of the evaluation report is expected forJuly 1999. The evaluators will keep the Chairman ofthe Evaluation Group informed of the progress ofthe work.

How Is the Fund Organized?

1. The IMF has nearly 2,700 staff, of which ap-proximately 1,100 are professional economists.26

Annex 4 sets out the Fund’s organizational structure.There are 6 area departments, 8 functional and spe-cial services departments, and 12 information, liai-son, and support departments. Most economistswork in area departments and functional and specialservices departments.

2. Each department has a “Front” or “Immediate”Office, and several divisions. Staff in the Front Of-fice include the head of the department (called a Di-rector), between 5 and 15 managerial-level staff, andseveral support staff. The Front Office supervisesand coordinates the work of the department. Each di-vision within the department is led by either a “Divi-sion Chief” or an “Assistant Director” (dependingon seniority) and contains around 6 to 10 econo-mists. It may also contain a research assistant (infunctional departments). Each division deals with asubset of the issues/countries covered by the depart-ment. Area departments are primarily responsible formonitoring and assessing economic developments inmember countries in the region. For example, theAfrican Department monitors and analyzes eco-nomic developments in the Fund’s 44 African mem-ber countries and in the region as a whole.

3. Functional and special services departmentscontribute to the Fund’s monitoring and analysis ofdevelopments in member countries, but they are or-ganized around issues or functions rather than coun-tries, and they also monitor and analyze develop-ments in the international monetary system as awhole. For example, the Fiscal Affairs Departmentspecializes in fiscal policy and fiscal institutions;and the Monetary and Exchange Affairs Departmentspecializes in monetary policy, monetary and finan-cial institutions, and exchange rate policy.

4. The Policy Development and Review Depart-ment has a particularly important role in the organi-zation. It reviews and approves many of the docu-ments originating in area departments to ensure thatthe work produced is consistent with the Fund’soverall approach, and that inconsistencies do notoccur between the advice given to one membercountry and the advice given to another. As the namesuggests, the Department also develops overall poli-cies for the organization. For example, the recentlyintroduced Contingent Credit Line was designed bythe Policy Development and Review Department.

5. The Research Department is also classified as afunctional department. Its role is discussed furtherbelow.

6. Economic research, as we have defined it at thebeginning of Section II, is conducted to a greater orlesser extent in all the area departments and functionaland special services departments in the Fund.

What Are the Objectives of EconomicResearch in the Fund?

7. Although not specifically referred to in the Ar-ticles of Agreement, research is conducted by theFund to help it achieve the “Purposes” stated in theArticles of Agreement, particularly the first purpose:

To promote international monetary cooperationthrough a permanent institution which providesthe machinery for consultation and collaborationon international monetary problems.27

8. The objectives of research undertaken in theFund were most recently specified explicitly in the1993 Review of Research Activities in the Fund:

46

Annex II Nature and Organization of EconomicResearch in the Fund

26Fund economists are hired through two main channels: (1)through the Fund’s Economist Program, which hires recent grad-uates from top economics faculties around the world (generally atthe Ph.D. level); and (2) at midcareer level. Midcareer econo-mists are hired from public policymaking institutions, academia,and the private sector. The Economist Program looks for peoplewith a strong interest in public policy and the capacity to work invarious parts of the Fund. Economist Program hires spend theirfirst two years in two different parts of the Fund, and are then of-fered a permanent place in a department if they have performedsuccessfully in their first two years. 27Article I (i).

Annex II

The main objectives of research in the Fund areto further the staff ’s understanding of policy andoperational issues of relevance to the institution,and to improve the analytical quality of work pre-pared for management and the Executive Board,and of the advice provided to member countries.Dif ferent departments have differing objectives,depending on their particular institutional respon-sibilities. Generally speaking, the research pro-grams of area departments are oriented towardcountry-specific and regional issues and seek to:(1) deepen the staff ’s understanding of countrysituations for purposes of surveillance and theformulation of programs supported by the Fund;(2) strengthen the analytical basis for policy ad-vice provided to country authorities; (3) assist theauthorities in developing their analytical and pol-icymaking capacities; and (4) disseminate thestaff ’s experience with policy approaches to eco-nomic problems and issues.

As functional departments have a greater diversityof interests and responsibilities, their research pro-grams are more varied. These departments engagein research so as to: (1) improve surveillance of de-velopments in the international monetary and fi-nancial systems, and in the world economic situa-tion; (2) strengthen the analysis related to thedesign of adjustment and reform programs; (3) im-prove technical assistance provided to countries;(4) support the development and implementation ofthe Fund’s financial policies and operations; and(5) provide a set of up-to-date international statisti-cal standards, as well as guidance on the statisticaltreatment of new issues and priorities in statistics.28

What Type of Research Is Done in the Fund?

9. As the discussion above suggests, decisionsabout what research should be undertaken arelargely decentralized. Most research projects are ini-tiated and designed at the departmental level. The1993 Review noted that “this allows resources to bedirected toward the most important policy and oper-ational problems confronting each department.”29

10. Area departments tend to undertake mainly re-search that we have defined at the beginning of Sec-tion II as policy analysis research. This is consistentwith the objectives for area department research statedabove. That is, the research is mainly concerned withdeepening the staff ’s understanding of country situa-

tions and strengthening the analytical basis for policyadvice in surveillance and program formulation. Somepolicy development research is also conducted in areadepartments. This is consistent with the objective ofdisseminating the staff ’s experience with policy ap-proaches to economic problems and issues.

11. Functional and special services departments,particularly the Monetary and Exchange Affairs De-partment and the Fiscal Affairs Department, under-take a mix of policy analysis, policy development,and policy foundation research. The Statistics Depart-ment and the Treasurer’s Department undertake verylittle economic research (the Statistics Departmentdoes, however, undertake specialized research in sta-tistical methodology). The Policy Development andReview Department conducts mainly policy develop-ment research, such as the recent “IMF-SupportedPrograms in Indonesia, Korea, and Thailand: A Pre-liminary Assessment.” The research conducted in theResearch Department is discussed separately below.

12. In order to get a ballpark idea of the total amountof research conducted in the Fund, the type of researchconducted, and the distribution of that research be-tween departments, we have constructed a historicallist of research output of the Fund over the last fouryears, and classified the research in various ways.30

13. Tables 1 to 5 at the end of this annex set out:

• research by country specificity (country-specific, cross-country, non-country-specific,or not classified) (Table 1);

• research output by type of country (Table 2);

• research output by department (Table 3);

• research output by topic31 (Table 4); and

• research by document type and department(Table 5).

47

28Review of Research Activities in the Fund, prepared by theInterdepartmental Working Group on Fund Policy Advice, No-vember 16, 1993, p. 2.

29Ibid., p. 3.

30This list was constructed by combining the official annual listof completed research projects from the Interdepartmental Work-ing Group on Fund Policy Advice, the Fund’s publication Re-search Activities of the International Monetary Fund, January1991–December 1997,and several other lists of research outputthat departments provided us with. We have classified researchoutput according to year of publication. This is somewhat artificial,as a paper that was worked on throughout one year may not havebeen published until the following year. We have tried to capture asmuch of the Fund’s research output as we can, but the list may misssome shorter internal pieces of research that have not been pub-lished and some research that has been published outside the Fundthat has bypassed the Fund’s normal vehicles for the distribution ofresearch and has not been reported in the Interdepartmental Work-ing Group’s list. The list may also fail to incorporate some papersthat, although not considered to be pieces of research themselves,may have a research component to them. The list for 1998 is likelyto be more comprehensive than lists for earlier years.

31Classification taken from Research Activities of the Interna-tional Monetary Fund, January 1991–December 1997.


How Much of the Fund’s Resources AreAllocated to Research?

14. It is difficult to estimate the total amount of re-sources dedicated to research in the Fund. The Fund’sBudget Reporting System does not record “research”as a separately defined output, partly because differ-ent types of research are conducted in the Fund (forexample, the research associated with surveillancework is classified as “surveillance”). Furthermore,the value of research depends not only on how muchtime is available for research, but also on the timethat the researcher has taken to convey the ideas inthe research to others in the organization (through in-formal conversations, meetings, follow-up memos,etc.) and from the time that nonresearchers havetaken to absorb the results of research that is con-ducted both within the Fund and outside it. Timespent on these activities is very difficult to quantify.

How Do Individual DepartmentsAllocate Resources to Research?

15. The process by which resources are allocatedto research varies among departments. In general, inarea departments, research is planned at the divisionlevel as part of the annual Article IV consultationprocess (whereby a team of Fund economists visiteach Fund member, generally annually, to discussthe country’s economic policies with government of-ficials and others in the member country and makean assessment and policy recommendations). Re-search tends to be undertaken on countries that donot have economic programs supported by the IMF(a program is the set of measures agreed to by themember country in conjunction with the use of theFund’s financial resources), as program divisionsfind their time and resources consumed by missiontravel and program work. Some departments saythey have a “wish list” of research projects that theywould like to do, but frequently operational demandscrowd out time for research.

16. The Asia and Pacific Department has experi-mented with setting up a small group of staff whohave been given significantly reduced operationalresponsibilities so that they have time to do researchon important issues relevant to the Asia-Pacific re-gion. Some of the topics for this research come fromdiscussions in the Front Office. Other topics are cho-sen by the staff themselves.

17. People we spoke to in some of the functionaldepartments described research as the residual intheir departments’budget allocation process. De-mand-driven operational work such as technical as-sistance, mission work, and review work takes prior-

ity, and remaining time is allocated to research andother activities (training, etc.). In general, some re-search topics are directed from the Front Office andothers are chosen by individual economists, in con-sultation with their division chief.

18. Several departments also set money aside tobring in visiting scholars to work on projects of in-terest to the Fund and interact with Fund staff. Thesize of the visiting scholars program, and the way itoperates, varies by department.

What Is the Role of the ResearchDepartment?

19. As can be seen from Table 5 at the end of thisannex, the Research Department conducts about 25percent of the total research produced by the Fundin volume.32 Given its prominent role in the Fund’sresearch activities, we describe it separately here.

20. The Department has a Front Office (consistingof 7 managerial staff and 15 other staff) and 6 divi-sions: Capital Markets and Financial Studies, Com-modities and Special Issues, Developing CountryStudies, Economic Modeling and External Adjust-ment, Emerging Market Studies, and World EconomicOutlook. Around 70 professional economist staff workin the department, supported by around 23 research of-ficer/assistants and 5 specialized technical vendors.The Director of the Research Department is known asthe Fund’s Economic Counselor. This role requires theDirector to be a source of independent advice to theFund on current policy issues and the design of Fundpolicies and operations, and to convey such ideas topolicymakers in the organization as well as outside.

21. The Department has several key (somewhatoverlapping) functions:

• to conduct research on issues relevant to theFund;

• to input into the analysis and design of Fundpolicy advice to member countries (throughparticipation on missions and review of otherdepartments’work);

• to prepare the World Economic Outlook, in-cluding coordination of the interdepartmentalforecasting exercise; and

• to prepare the International Capital Marketsreport.

22. The Department also prepares notes and pre-sentations on the current state of the world economy

48

32Note, however, that a volume estimate is somewhat simplisticsince some of the research produced in the Research Departmentis of much larger scale than that produced in area departments.

Annex II

and key international economic and financial issuesfor the Executive Board and various other audiencessuch as the G-7 and APEC.

23. The Department has provided a rough esti-mate of the breakdown of its professional econo-mists’ time (for the Department as a whole) inFY1998/99 as follows:

10.5% Research for and preparation of theWorld Economic Outlook

17% Research for and preparation of theInter-national Capital Marketsreport and re-sources allocated to the global marketsunit

7.5% Reviewing the work of other departments

4% Article IV and use of Fund resources,missions, and mission-related research

2.5% Preparation of G-7 notes, CoordinatingGroup on Exchange Rate (CGER) exer-cises, and briefings for other meetings

2% Research for papers designed for presen-tation to the Executive Board (for exam-ple, the 1998 board paper on Early Warn-ing Systems)

35% Other research

21.5% Other activities (predominantly manage-rial supervision and training)

24. The Department notes that the figure for“other research” is probably overestimated as it iscalculated as a residual, and probably includes otheractivities (including, possibly, research for the WorldEconomic Outlook).

25. The research output of the Department coversa wide range of topics. Research output reflects bothdirected research (topics chosen by departmentalmanagement), and nondirected research (topics cho-sen by individual researchers):

Fully directed research. This generally takesthe form of papers written for the ExecutiveBoard. The Economic Counselor, in consul-tation with management, decides what pa-pers will be prepared for the ExecutiveBoard. These generally stem from requestsfrom the Executive Board for research oncertain issues or discussion that the Eco-nomic Counselor has observed in the Execu-tive Board where he thinks that a researchpaper could add depth to the ExecutiveBoard’s discussions. These papers (such asthe recent papers on Hedge Funds, the Coor-dinating Group on Exchange Rate frame-work for estimating equilibrium exchangerates, and the role of Early Warning Systemsin anticipating balance of payments crises)

are generally a mix of literature review andnew thinking by the Department.

Semidirected research.As part of the processof preparing the World Economic Outlook andthe International Capital Marketsreport, theFront Office generates a broad set oftopics/themes for each report. Individual re-searchers can develop their own specific re-search proposals within these topics/themes,and discuss and agree on them with the FrontOffice. Research may also be conducted bymutual agreement with an area departmentthat requests the services of someone on theResearch Department staff to conduct a pieceof country-specific research.33

Nondirected research. When not otherwiseengaged in review work, mission activities,other operational activities or directed re-search, staff are able to work on subjects oftheir own choosing, typically in consultationwith their managers, subject to the constraintthat the work must have some relevance to theFund’s mission. This generates a broad rangeof research. Some young staff continue to ex-plore their thesis topics. Others work on top-ics relevant to the division they are in thatthey have either identified individually or inconjunction with their managers.

Does a Mechanism Exist forCoordinating Research BetweenDepartments and/or Identifying High-Priority Research?

26. The Working Group on Fund Policy Advice(WGFPA) was set up in 1989 to “serve as a forumfor identifying country related, analytical and policyissues and strengthening research collaboration onthese issues so as to enhance the effectiveness ofFund policy advice.”34 This was an attempt to bringsome centralization to the otherwise decentralizedprocess of conducting research.

49

33There is no formal contracting system for area departmentsthat wish to use the expertise of a staff member in the ResearchDepartment. Departments that require specialized research (orthat simply want a staff member from Research to accompany amission) either contact a specific individual, or they approach theEconomic Counsellor, someone in the Front Office, or the rele-vant division chief and ask them whether the department is ableto provide someone suitable for the project or mission.

34“Review of Research Activities in the Fund,” op. cit., p. 1. It has 15 members—one from each area and functional/special

services department, and one from the External Relations Depart-ment. It is chaired by the member from the Research Department.All members are appointed by the First Deputy Managing Director.


27. The Working Group on Fund Policy Advicemeets several times a year (historically, between twoand seven times). It is responsible for maintainingand disseminating a database of all ongoing andplanned research projects across the Fund and ensur-ing that there is no overlap between projects. (Thelist of ongoing projects can be found on the internalwebsite (www-int.imf.org), and a similar list, editedto remove confidential research, appears on theFund’s external website (www.imf.org).)

28. The Working Group on Fund Policy Advice isalso responsible for taking a Fund-wide perspectiveon the key issues on which the Fund needs to do re-search and compiling a list of projects of Fund-wideinterest that should be undertaken. Its terms of refer-ence specifically refer to “analytical and empiricalissues that arise in individual country cases whichhave wider implications” and “special studies . . . toevaluate and draw lessons from the Fund’s experi-ence in providing policy advice to its members . . . .”

29. Once a year, a meeting is devoted to identify-ing these priority projects. Each member comes tothe meeting with a list of projects that his/her depart-ment intends to undertake or thinks should be under-taken. Other members of the group may indicatetheir own department’s willingness to participate. In-dividual members also make suggestions outside ofthe departmental list, and a list of suggestions madeby Executive Directors in the course of Board meet-ings is also discussed.

30. A complete list is then compiled, based on de-partments’willingness to undertake the projects, andsent to the First Deputy Managing Director, whoagrees to or amends the project list and may offeradditional suggestions. In FY1997/98 the WorkingGroup identified eight such research projects, in-cluding The Implementation of Monetary Policy inDollarized Economies, which was presented at anExecutive Board seminar, and Exit Strategies—Pol-icy Options for Countries Seeking Greater ExchangeRate Flexibility, which was presented to the Execu-tive Board. Both papers have been published in theOccasional Papers series. In FY1998/99, 17 projectswere identified.

31. The 1989 terms of reference for the WorkingGroup on Fund Policy Advice also specified that thegroup should receive, from the Research Department:

• “reports on its agenda in the area of the de-sign of economic policy, particularly relatingto the developing countries” and

• “periodic reports on the implications of its re-search work for practical policy issues.”

32. There does not appear to have been any specificreporting on these issues in the history of the group.

What Role Does the Executive BoardPlay in the Research Process?

33. The Executive Board has an indirect role inshaping the research agenda of the Fund. The Boardinfluences the research conducted in the Fund infour ways:

(1) During Board meetings, Board members maymake suggestions for research that they thinkwould be useful for the Fund to conduct. TheBoard Secretary makes a note of the suggestionsof Executive Directors, and these suggestionsfeed into the deliberations of the Working Groupon Fund Policy Advice (discussed above).

(2) Issues discussed in the Board may spark re-search ideas in individual staff members whoare attending the Board meetings.(3) Executive Directors, on behalf of the coun-tries they represent, can suggest research ideasto mission chiefs in advance of Article IV mis-sions to their constituency countries.

(4) Department directors and the managementdecide on what research products (outside ofArticle IV–related Selected Issues research)they think should be produced for presentationto the Executive Board. These are included inthe twice yearly forward-looking Work Pro-gram of the Executive Board (the Work Pro-gram is a list of the items that management pro-poses for consideration by the Executive Boardin Board meetings in the six months ahead. Thelist of items includes Article IV reports, internalmanagement issues, general policy issues, etc.,which are predictable in advance). Directorsconsider the Work Program in a Board meeting,and may seek to add or delete items from thelist, including specific pieces of research.

34. The World Economic Outlookand the Interna-tional Capital Marketsreport are always presented tothe Board in draft form (i.e., additional changes canbe made after the Board meeting). Other individualpieces of research presented vary from year to year. In1998, for example, the Board considered a paper on“Hedge Funds and Financial Market Dynamics” andanother on “Experience with Disinflation and Growthin the Transition Economies.” Some of these researchpieces are designed mainly to inform the Board ratherthan to drive Fund policy (e.g., “Hedge Funds”). Oth-ers are not research pieces in themselves, but policydevelopment papers that are based upon research(e.g., “Involving the Private Sector in Forestalling andResolving Financial Crises”).

35. Members of the Executive Board also receivecopies of all of the Fund’s research output.

50

Annex II

How Is Research Disseminated Insideand Outside the Fund?

36. Not all research conducted in the Fund is dis-seminated externally. Some feeds into Board paperson policy development (for example, the researchcomponent of the policy development process sur-rounding the Contingent Credit Line), most of whichare not made public. Other pieces of research are cir-culated internally in the form of Internal Memo-randa. For example, in 1998, the Policy Develop-ment and Review Department issued several memosincluding “Aid in Fund Programs: Preliminary Con-siderations” (a note on analytical issues related totreatment of aid in Fund-supported programs), and,in conjunction with the Research Department,“Asian Crisis Countries: Exchange Rate Assess-ments” (a note presenting a first cut at exchange rateassessments for Indonesia, Korea, and Thailand).

37. Research that is disseminated externally aswell as internally is published in several forms:

IMF Survey. This is a 16-page newsletter-typepublication issued 23 times a year. It containsshort, nontechnical articles on recent IMF re-search and policy analysis and articles on cur-rent events at the IMF. It is automatically dis-tributed to university libraries, universityprofessors, government agencies, internationalagencies, and financial writers, and is availableby subscription and on the Fund’s website.

Finance & Development. This is a free, nontech-nical quarterly magazine for policymakers, acad-emics, economic practitioners, and others whoare interested in the work of the IMF and currenteconomic issues. The publication includes arti-cles reviewing the analysis and activities of theIMF. Articles are about four pages in length.Some of them draw on more technical Fund pub-lications such as Working Papers. Some are writ-ten by guest authors. The magazine also containsbook reviews on current topical publications. Is-sues are also available on the Fund’s website.

IMF Staff Papers. This is the Fund’s in-houseeconomic journal aimed at the academic com-munity. It is published quarterly and containstheoretical and empirical analyses of variousmacroeconomic and structural issues. Begin-ning with the March 1999 issue, copies are alsoavailable on the Fund’s website.

World Economic and Financial Surveys. Thesemiannual World Economic Outlook (WEO)and the annual International Capital Marketsreport are the two anchor publications in thispublication series, but other individual studiescovering monetary and financial issues of im-

portance to the world economy are also in-cluded in the series (e.g., Toward a Frameworkfor Financial Stability, 1998). This series iswidely distributed to member governments,academia, business, media, and internationalorganizations. (The WEOand the InternationalCapital Markets report are also available on theFund’s website.)

IMF Staff Country Reports. These reports con-tain background material and research on eco-nomic developments and trends in individualIMF member countries. They are backgrounddocuments prepared in the context of the peri-odic consultation with member countries. Notall member countries permit the release ofbackground documents. The research content incountry reports varies by report. These reportsare targeted at member country officials, acade-mia, the media, and business. They are alsoavailable on the Fund’s website.

Economic Issues. These publications (about 10annually) present the Fund’s economic research(drawn primarily from selected IMF Working Pa-pers) in accessible language, to a nonspecialistaudience. The one-topic booklets are designed toacquaint readers with Fund research topics of cur-rent importance. They are distributed to researchinstitutes and academia (as well as to business,the media, and other educated lay audiences) andare also available on the Fund’s website.

Working Papers. Working papers cover a widerange of topics of both a theoretical and an ana-lytical nature. They are distributed to membercountry government policymakers, academia,and the media by subscription or individual copy.They are also available on the Fund’s website.

Policy Discussion Papers (formerly Papers onPolicy Analysis and Assessment). These paperscover research in the area of policy design.They are normally fairly nontechnical and areaimed primarily at operational staff involved inmission work in the Fund and people outsidethe Fund who are interested in policy issues.They are also available on the Fund’s website.Consideration is being given to compiling thesepapers into an annual volume.

Books and Seminar Volumes. These cover awide variety of topics (e.g., Transition to Mar-ket: Studies in Fiscal Reform (1993); Value-Added Tax: International Practice and Prob-lems (1988)).Seminar volumes are based onseminars held or cosponsored by the IMF. Bothbooks and seminar volumes are distributed tomember country government officials, acade-mia, business and the media.

51


Occasional Papers.The Occasional Papers se-ries (about 20 produced annually) features staffanalyses of a variety of economic and financialsubjects of current importance to the Fund’swork, with topics including both country andpolicy analyses. These publications are aimed atgovernment officials, business, academia, andthe media.

Staff Studies.These one-off studies cover a rangeof topics (e.g., External Evaluation of the ESAF,The Economy of the West Bank and Gaza Strip)

and are targeted at member government officials,academia, business, and the media.

A list of these documents is found in the Fund’sPublications Catalog. The Fund also has an internaldocument database, which contains (among other

things) Working Paper and Policy Discussion Papertitles and summaries, and Board papers and IMFStaff Country Reports (both in full text in recentyears). Research is also presented to external partiesthrough Fund-organized seminars and conferences,and at outside conferences.

52

Table 1. Research Products of the IMF by Country Specificity, 1995–98

1995 1996 1997 1998 All Years

Research specific to:Country-specific 168 151 134 182 635Cross-country 81 97 102 107 387Nonspecific 154 100 116 146 516Not classified 9 6 1 6 22

Total 412 354 353 441 1,560

Table 2. Research Products of the IMF by Type of Country, 1995–98

Country Type 1995 1996 1997 1998 All Years

Relevant to all countries 103 70 81 107 361G-7 79 62 74 51 266Other industrial countries 75 99 85 106 365Transition economies 62 50 46 60 218Developing countries 122 104 120 168 514Not specified 8 5 1 2 16

Total 412 354 353 441 1,560

Note: Numbers in columns may not add to total at bottom of column because some research was relevant to more than one type of country grouping.

Annex II

53

Table 3. Research Products of the IMF by Department, 1995–98

Department1 1995 1996 1997 1998 All Years Percent of Total

Area departments 165 174.5 161 225.43 726 47

Africa (135) 18 23 13.5 20.4 74.9 5Asia-Pacific (98) 25.5 30 30 91.5 177.0 11European I (86) 86 83.5 64 58.5 292.0 19European II (75) 8 12.5 11 17.5 49.0 3Middle Eastern (59) 13.5 15.5 21 15.5 65.5 4Western Hemisphere (103) 14 10 21.5 22.0 67.5 4

Functional and special services departments 237 173.5 186 216.37 813 52

Fiscal Affairs (98) 31.5 29.0 33.0 24.8 118.3 8IMF Institute (42) 0 1.0 10.0 21.3 32.3 2Internal Audit and Inspection 0 0.0 1.0 0.0 1.0 0Legal 0 0.7 1.0 0.2 1.9 0Monetary and Exchange Affairs (68) 37 37.5 42.8 39.7 157.0 10

Office of the Managing Director 0 1.0 0 1.3 2.3 0Policy Development and Review (103) 33 21.7 15.3 10.5 80.5 5Research (67) 123.5 74.5 77.3 116.2 391.6 25Secretary’s 0 0.0 2.5 0.0 2.5 0Statistics (79) 8 6.5 1.0 1.0 16.5 1Treasurer’s (63) 4 1.7 2.0 1.2 8.9 1

OtherGeneva Office 1 1 2 0

Total 412 354 353 442 1,561 100

1Number of permanent staff members in grades A11–B5, including resident representatives, is shown in parentheses.Notes: Joint research was apportioned evenly among the departments involved.The large increases in research output in the Asia and Pacific Department and the Research Department in 1998 probably reflect a more complete list of re-

search in the two departments in 1998 than in earlier years, as these departments specifically sent us a list of their 1998 research outputs, whereas the infor-mation for earlier years was obtained from other sources.

Table 4. Research Products of the IMF by Research Topic, 1995–98

Topic 1995 1996 1997 1998 All Years

International monetary system 24 26 35 42 127International capital markets and official financing 61 61 66 96 284Inflation and inflation stabilization 21 23 19 31 94Growth and structural issues 133 127 122 129 511Development economics 50 36 16 35 137Economies in transition 53 30 27 22 132Fiscal issues 68 62 61 63 254Monetary and financial sector issues 39 33 37 33 142Exchange rate behavior 33 18 26 34 111Fund financial policies 21 13 4 5 43Statistical issues 12 7 3 4 26

Total 412 354 353 441 1,560

Note: Numbers in columns may not add to total at bottom of column because some research fits into more than one topic category.


54

Table 5. Research Products of the IMF by Document Type and Department, 1995–98

Working IMF Occasional Staff Other Fund OutsideDepartment Paper Staff Papers Paper PPAA Memorandum Publication Publication Published1 Mimeo2

Area departments 223 26 40 16 258 87 6 30 118

African 39 5 10 2 15 51 2 24Asia-Pacific 35 5 9 4 68 10 3 9 43European I 56 7 7 4 219 1 4 17European II 31 4 7 5 2 1 5 5Middle Eastern 39 1 7 2 9 2 9 15Western Hemisphere 23 4 1 9 1 1 14

Functional and special services 457 67 46 26 19 66 76 36 84

Fiscal Affairs 77 6 8 9 3 10 1 12 6IMF Institute 18 1 2 3 5 3Internal Audit and

Inspection 1Legal 2 1Monetary and

Exchange Affairs 74 5 11 8 3 13 5 15 25Office of the Managing

Director 3 1 1Policy Development

and Review 28 1 13 4 10 15 5 12Research 239 54 14 3 2 17 64 3 32Secretary’s 3Statistics 9 2 1 4Treasurer’s 5 4 1

OtherGeneva Office 4

1Not specified where.2Or not enough information to categorize.Note: Staff Memoranda are predominantly Selected Issues documents associated with Article IV consultations.The table counts every individual piece of re-

search in a Staff Memorandum as a separate Staff Memorandum for the purposes of the table, even though one Staff Memorandum may, in fact, contain severalpieces of research.

Table 6. Comparison of Citations of Staff Papers, Brookings Papers on Economic Activity, and World Bank Economic Review (Citations of 1991 and 1995 Articles)

Brookings Papers on World BankIMF Staff Papers Economic Activity Economic Review_________________ _________________ _________________

1991 1995 1991 1995 1991 1995

Number of citations since publication 208 78 331 58 148 99Number of articles 32 24 19 12 45 32Average citations per article:

including self-citations 6.5 3.3 17.4 4.8 3.3 3.1excluding self-citations 5.9 2.7 16.4 4.6 3.1 2.8

Source: Social Sciences Citation Index.

Annex II

55

Table 7. Comparison of Journals Citing Staff Papers, Brookings Papers on Economic Activity,and World Bank Economic Review (Citations of 1991 and 1995 Articles)

1991Imf sp (32 articles) 208 bpea (19 articles) 331 wber (45 articles) 148Int monet fund s pap 20 am econ rev 20 world dev 20j int money fin 10 brookings pap eco ac 20 world bank econ rev 9econ j 9 eur econ rev 16 econ dev cult change 6j dev econ 9 reg stud 12 am j agr econ 5world dev 9 weltwirtsch arch 10 land use policy 5j int econ 8 q j econ 8 econ polit weekly 4weltwirtsch arch 8 rev econ stat 8 food policy 4appl econ 6 int monet fund s pap 6 j public econ 4am econ rev 5 j int econ 6 world bank res obser 4eur econ rev 5 j polit econ 6 dev change 3j econ issues 5 econ j 5 dev econ 3mach sch econ 5 growth change 5 j dev stud 3brookings pap eco ac 4 j comp econ 5 j econ lit 3econ model 4 j econ perspect 5 j econ perspect 3j comp econ 4 jahrb natl stat 5 j mod afr stud 3open econ rev 4 oxford rev econ pol 5 land econ 3rev econ stat 4 pap reg sci 5 rev income wealth 3rev etud comp est q 4 can j econ 4 b indones econ stud 2econ lett 3 econ lett 4 ids bull-I dev stud 2j dev stud 3 j econ hist 4 j dev areas 2j econ dyn control 3 j law econ 4 j econ behav organ 2j econ persp 3 rand j econ 4 soc econ stud 2j jpn int eco 3 reg sci urban econ 4 third world plan rev 2j macroecon 3 rev income wealth 4 trimest econ 2j money credit bank 3 appl econ 3 africa 1j policy model 3 econ inq 3 agr ecosyst environ 1rev econ 3 econ polit weekly 3 am j econ sociol 1world bank econ rev 3 ind labor relat rev 3 am polit sci rev 1world dev j dev stud 3 j monetary econ 3 ambio 1eastern eu econ 2 j money credit bank 3 ann assoc am geogr 1econ model 2 j urban econ 3 ann u rev anthropol 1economist 2 natl tax j 3 bus hist 1econ polit weekly 2 new engl econ rev 3 can j econ 1econ rec 2 rev ind organ 3 ecol econ 1explor econ hist 2 small bus econ 3 econ j 1int polit oslo 2 appl econ lett 2 econ lett 1j afr econ 2 cambridge j econ 2 environ plann 1j bank financ 2 can public pol 2 environ resour econ 1j econ lit 2 econ hist rev 2 geogr z 1kyklos 2 econ model 2 george wash j intl 1scand j econ 2 environ plann c 2 gerontologist 1acta oecon 1 ind relat 2 int labour rev 1appl econ lett 1 int j ind organ 2 int monet fund s pap 1cato j 1 int regional sci rev 2 int rev adm sci 1contemp econ pol 1 j common market stud 2 j am plann assoc 1econ dev cult change 1 j dev econ 2 j asian stud 1economica 1 j econometrics 2 j bank finance 1econ theory 1 j hous econ 2 j comp econ 1eur j op res 1 j ind econ 2 j dev econ 1europe-asia stud 1 j labor econ 2 j econ educ 1geneva pap risk ins 1 j policy model 2 j eur soc policy 1int econ rev 1 j popul econ 2 j inst theor econ 1j econ 1 j public econ 2 j lat am stud 1j financ quant anal 1 j regional sci 2 j law econ organ 1j monetary econ 1 kyklos 2 j peasant stud 1j post keynesian ec 1 mich law rev 2 j policy model 1j world trade 1 mon labor rev 2 j polit econ 1math comput simulat 1 q rev econ financ 2 j rural develop 1nationalokon tidsskr 1 rev econ 2 popul dev rev 1oxford econ paper 1 scand j econ 2 public admin devel 1public money manage 1 urban stud 2 public choice 1q rev econ finan 1 world dev 2 public finance 1s afr j econ 1 accident anal prev 1 q rev econ financ 1scand j econ 1 acta sociol 1 rev can etud dev 1


56

Table 7 (continued)

1991 (continued)scot j polit econ 1 am j econ sociol 1 s afr j econ 1southern econ j 1 am polit sci rev 1 soc forces 1trimestr econ 1 ann pharmacother 1 soc legal stud 1wb res ober 1 ann regional sci 1 soc policy adm 1world econ 1 antitrust law 1 soc sci med 1

cato j 1 tijdschr econ soc ge 1china econ rev 1 urban geogr 1communist econ ec tr 1 world econ 1econ dev q 1 yale law j 1econ geogr 1econ record 1econ soc rev 1econometrica 1environ plann a 1eur j polit res 1eur rev agric econ 1eur urban reg stud 1georgetown law j 1harvard bus rev 1housing stud 1int econ rev 1j am real estate urb 1j appl econom 1j bank financ 1j econ bus 1j econ educ 1j econ lit 1j hum resour 1j inst theor econ 1j jpn int econ 1j labor res 1j law econ organ 1j macroecon 1j transp eng 1j world trade 1kolner z soziol soz 1manch sch econ soc 1med care 1omega-int j manage 1open econ rev 1oxford b econ stat 1oxford econ pap 1pac aff 1pharmacoeconomics 1polit ekon 1polit quart 1prog plann 1public finance rev 1rev econ stud 1s afr j econ 1scot j polit econ 1southern econ j 1stanford law rev 1strategic manage 1technol forecast soc 1transport res b-meth 1transport res e-log 1transport rev 1transport sci 1transportation 1trimest econ 1u pa j int econ law 1u penn j int bus law 1water resour res 1world bank econ rev 1world bank res obser 1world econ 1

Annex II

57

Table 7 (concluded)

1995imf sp (24 articles) 78 bpea (12 articles) 58 wber (32 articles) 99int monet fund s pap 13 am econ rev 4 world bank econ rev 11j int money financ 5 q j econ 4 j dev econ 5econ j 4 brookings pap eco ac 3 world bank res obser 4j econ lit 4 eur econ rev 3 econ rec 3open econ rev 4 ind relat 3 j financ 3brookings pap eco ac 3 j afr econ 3 world dev 3am econ rev 2 world econ 3 am econ rev 2appl econ 2 econ j 2 econ dev cult change 2appl econ lett 2 j dev stud 1 econ j 2econ lett 2 j law econ 1 int monet fund s pap 2econ rec 2 b indones econ stud 1 j dev stud 2j jpn int econ 2 calif law rev 1 j econ lit 2oxford rev econ pol 2 communist econ ec tr 1 j econ perspect 2weltwirtsch arch 2 contemp econ policy 1 j int money financ 2am polit sci rev 1 econ inq 1 j portfolio manage 2ann regional sci 1 econ lett 1 new engl econ rev 2contemp econ policy 1 econ polit weekly 1 q rev econ financ 2dev econ 1 econ soc rev 1 world econ 2econ dev cult change 1 economist 1 africa 1econ inq 1 ekon samf tidskr 1 am j agr econ 1econ model 1 eur j oper res 1 appl econ lett 1econ soc rev 1 eur rev agric econ 1 brookings pap eco ac 1eur econ rev 1 food policy 1 can j econ 1ind relat 1 ind labor relat rev 1 china econ rev 1int j forecasting 1 int econ rev 1 common mkt law rev 1j comp econ 1 int polit-oslo 1 communist econ ec tr 1j econ dyn control 1 j appl econom 1 comp polit 1j econ perspect 1 j bank financ 1 contemp econ policy 1j int econ 1 j dev econ 1 decon educ rev 1j monetary econ 1 j econ lit 1 desarrollo econ 1j policy model 1 j inst theor econ 1 econ lett 1j polit econ 1 j int econ 1 econ model 1j popul econ 1 j money credit bank 1 econ polit weekly 1jpn world econ 1 j polit econ 1 econ transit 1kyklos 1 jahrb natl stat 1 ecosystems 1nber macroecon ann 1 nationalokon tidsskr 1 energ econ 1public choice 1 open econ rev 1 eur econ rev 1reg stud 1 oxford econ pap 1 europe-asia stud 1scand j econ 1 polit soc 1 food policy 1soc res 1 rev black polit econ 1 geo forum 1va law rev 1 weltwirtsch arch 1 j afr econ 1world bank econ rev 1 j comp econ 1world dev 1 j econ theory 1

j financ econ 1j financ intermed 1j financ quant anal 1j finance 1j int econ 1j interam stud world 1j libr inf sci 1j monetary econ 1j popul econ 1lat am res rev 1open econ rev 1oxford econ pap 1public admin develop 1public choice 1rev financ stud 1soc forces 1soc res 1stud family plann 1theor soc 1water resour res 1weltwirtsch arch 1


58

Tabl

e 8a

.197

1–99

Cit

atio

ns o

f Sta

ff P

aper

sArt

icle

s P

ublis

hed

in S

elec

ted

Year

s(E

xclu

ding

Cit

atio

ns in

Sta

ff P

aper

s)

Year

of C

itatio

n__

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

Year

of P

ublic

atio

n19

703

75

53

75

15

31

47

21

30

10

00

00

00

00

00

1971

110

1214

75

139

97

177

64

33

27

00

00

00

00

00

019

752

817

2013

924

99

116

168

119

66

86

44

22

41

1976

419

3434

2432

2232

2420

2210

153

1520

87

83

67

80

19

800

1127

2425

2031

2311

126

35

97

11

35

019

810

1223

1818

1019

2411

613

89

24

23

21

1985

09

1631

1618

1921

915

1211

67

819

862

618

815

1510

119

115

41

119

902

917

2813

2621

2924

619

914

1833

2633

2632

133

1995

37

1534

919

964

917

919

972

113

Annex II

59

Table 8b. 1971–97 Comparison of Total Citations (Over Selected Time Periods) of Staff PapersArticles Published in Selected Years (Excluding Citations in Staff Papers)

Citations_________________________________________________________________________Year of Publication First three years1 First four years First five years

1970 10 15 201971 23 37 441975 27 47 601976 57 91 1151980 38 62 871981 35 53 711985 25 56 721986 26 34 491990 28 56 891991 55 81 1141995 25 59 681996 30 391997 16

Average 30.4 52.5 71.7

1“First three/four/five years” refers to the number of citations of Staff Papers articles in the first three/four/five years after they have been published (includ-ing the year of publication).


To ensure the quality and consistency of the Fund’swork, and to keep Fund staff abreast of developmentsin other areas of the Fund, review is used extensively.A formal review process is applied to a number ofFund documents, including the following.

Briefing Papers:internal briefings prepared byevery mission team prior to going on mission.Briefing papers contain background data, asummary of the issues that the mission teamthinks should be discussed on mission, and astatement of the position the team thinks itshould take.

Staff reports: these reports are prepared for theExecutive Board on the outcome of the mis-sion.

Letters of Intent:these contract-type documentsare written with member country authoritieswho are negotiating a program with the Fund.

Policy Framework Papers:these documents,prepared by member country authorities in col-laboration with staff in the Fund and the WorldBank, set out a medium-term economic and fi-nancial policy framework in conjunction withIMF/World Bank structural adjustment loans.

Country Strategy Papers:these papers set out amultiyear strategy and analytical framework toguide Fund work on specific countries.

Memoranda of Economic Policies: these docu-ments are written jointly with member countryauthorities negotiating a program with theFund.

World Economic Outlook.

International Capital Marketsreport.

Policy papers presented to the Executive Board:e.g., “Involving the Private Sector in Fore-stalling and Resolving Financial Crises.”

This annex describes the review process associ-ated with specific country-related work, namely, thefirst six types of documents identified above. The re-view process for the other documents listed above issimilarly thorough, but involves different reviewersdepending on the nature of the document.

After a document has been written, one or more ofthe senior staff in the Front Office of the author’s de-partment review it to determine whether it is consis-tent with the department’s overall approach. Oncethe author has made any amendments suggested by

the Front Office, the document is sent to the PolicyDevelopment and Review Department—the primaryreviewing department—and various other depart-ments depending on the nature of the document. Forexample, a briefing paper might be sent to the Mon-etary and Exchange Af fairs, Fiscal Af fairs, Legal,Statistics, Treasurer’s, and Research Departmentsfor comments. These latter Departments are not re-quired to comment if they do not think that they canadd any value (for example, both the Research De-partment and the Fiscal Affairs Department have, inconsultation with area departments, established a listof the countries that they regularly comment on).These departments check for technical accuracy, ap-propriateness of policy recommendations, complete-ness, and consistency of treatment across countries.

Reviewing departments often send the documentto several people in their department with differentspecializations. In some departments, all reviewers’comments are sent to the Front Office where theyare consolidated into a departmental statement (in-cluding any additional comments made by the FrontOffice coordinator) and sent back to the originatingdepartment, with a copy sent to the Policy Develop-ment and Review Department. In other departments,coordination of comments generally takes place atthe divisional level.

The authors use their judgment to incorporatechanges suggested by the reviewers, then send a re-vised copy to their Front Office and the Policy De-velopment and Review Department for clearance. Ifthe Policy Development and Review Departmentdoes not think that other departments’commentshave been adequately incorporated, they will not“sign off” on the document. Unresolved disagree-ments between departments are brought to the atten-tion of the Deputy Managing Directors, who haveresponsibility for adjudicating.

The review process is the subject of significantdebate and dissatisfaction in the Fund. Three yearsago, management issued a memorandum attemptingto streamline the review process and improve thequality of the outcome. The memorandum noted that“we do too much reviewing” and that steps shouldbe taken to reduce “by a considerable margin thevolume of reviewing that is done in the Fund.”

The memorandum made the following recommen-dations.

• originating departments should exercise dis-cretion over which departments, other than

60

Annex III The Review Process

Annex III

the Policy Development and Review Depart-ment, are asked to comment on papers;

• departments should not feel obliged to com-ment on all papers circulated to them;

• reviewing departments should confine theircomments strictly to their own areas of expertise;

• area departments should take full responsibil-ity for quality control;

• the Policy Development and Review Depart-ment, in its comments, should distinguish be-tween the two to four key issues that have to beaddressed, and minor or editorial comments;

• area departments should seek to consult withrelevant reviewing departments on importantpolicy issues before briefs are prepared;

• area departments should, as much as possible,allow reviewing departments three workingdays to give their comments; and

• papers sent to management should include aone-page summary that outlines key issues.This should be accompanied by a cover notethat identifies any differences of viewsamong departments.

Three years later, discussions we have had witheconomists throughout the Fund reveal that therecontinues to be substantial dissatisfaction with thereview process.

Management and department heads are aware ofthese problems, and are in the process of lookingagain at the way in which the interdepartmental re-view procedures are operating and the possible needfor improvements. The body of our report makesrecommendations for improvements to the process,from the perspective of (1) ensuring that researchershave a more effective input into operational work,while at the same time (2) reducing the overallamount of time that is devoted to the review process,both in area and functional departments.

61


INTERNATIONAL MONETARY FUNDChart of Organization

Area Functional and Special Services Information and SupportDepartments Departments Liaison Services

62

Annex IV IMF Organizational Chart

Board of Governors

Executive Board

AfricanDepartment

Asia and PacificDepartment

European IDepartment

European IIDepartment

Fiscal AffairsDepartment

IMF Institute*

LegalDepartment

Monetary andExchange Affairs

Department

Policy Developmentand ReviewDepartment

ResearchDepartment

StatisticsDepartment

Treasurer’sDepartment

External RelationsDepartment

Office in Europe

Office in Geneva

Regional Office forAsia and the Pacific

Fund OfficeUnited Nations

AdministrationDepartment

Secretary’sDepartment

Bureau of ComputingServices

Bureau of LanguageServices

Office of InternalAudit and Inspection

Investment Office-SRP

Office of Budgetand Planning

Middle EasternDepartment

Western HemisphereDepartment

Managing Director

Deputy Managing Directors

*The Institute also supports two training centers: the Joint Vienna Institute (Vienna, Austria) and the Singapore Regional Training Institute (Singapore).

Annex V

A-level: The Fund’s job gradings for permanent staffare divided into groups “A” and “B.” For econo-mists, A-level positions are predominantly nonman-agerial, although grade A15, the last grade before theB-level, has some managerial responsibility (notethat the career structure for noneconomists is some-what different).

Annual Performance Review: See Box 2 on page 28.

APEC: The Asia-Pacific Economic Cooperation(APEC) is a regional grouping of 21 economies inthe Asia and Pacific region. It was established in1989 as an informal dialogue group, and has sincebecome the primary regional vehicle for promotingopen trade and practical economic cooperation. TheAPEC group holds a number of meetings annually.The IMF’s Research Department provides informa-tion and analysis of current economic issues to cer-tain APEC meetings.

Area Department:See page 46, paragraph 2

Article IV Consultation: Under the provisions of Ar-ticle IV of the Articles of Agreement (see Articles ofAgreement), the Fund holds bilateral consultationswith all its members countries, in most cases everyyear. As part of these consultations, a staff teamfrom the Fund visits a country to discuss with the au-thorities the economic developments and the mone-tary, fiscal, and structural policies that the authoritiesare following. The team also gathers relevant eco-nomic and financial information on the economicsituation in the country. On its return to Fund head-quarters, the team prepares a report analyzing theeconomic situation and evaluating the stance of poli-cies. This serves as the basis for discussion by theFund’s Executive Board.35

Articles of Agreement: The Articles of Agreementestablished the IMF’s existence. They are a charterof rights and obligations on both the Fund and itsmembers. There have been several modifications tothe original Articles.

B-level: The Fund’s job gradings for permanentstaff are divided into groups “A” and “B.” Foreconomists, B-level is the managerial level (notethat the career structure for noneconomists is some-what different).

Coordinating Group on Exchange Rates (CGER) ex-ercise: Internally, the Fund tries to identify possiblemisalignments among major currencies. An interde-partmental working group (the CGER) acts as thetechnical secretariat to prepare exchange rate analy-sis for staff and management discussion using amethodology developed in-house. CGER exercisesare conducted periodically.

Department Director: Each Fund department isheaded by a director.

Economic Counselor:The Director of the ResearchDepartment is formally known as the Fund’s Eco-nomic Counselor. The role of the Economic Coun-selor is to be a source of independent advice to theFund on policy issues, to integrate the ideas of re-search staff into the design of Fund policies, and toconvey such ideas to policymakers inside and out-side the Fund.

Economist Program:Each year, the Fund hires 30–35economists below the age of 33 into its EconomistProgram. Participants in the program undertake one-year assignments in two different departments—usu-ally an area and a functional department—and takepart in at least two missions. Applicants require a su-perior academic training in economics—with empha-sis on monetary economics, international trade, andfinance and public finance. Typical participants in theEconomist Program are around 29 years old, with aPh.D. in macroeconomics and demonstrated aptitudein working as an applied economist on policy issuesin an international environment.36

Executive Board: The Executive Board is a 24-mem-ber, in-residence board. The Board is staffed by rep-resentatives of the Fund’s member countries. TheBoard meets at least three times a week in formalsession and is responsible for conducting the day-to-day business of the Fund. It carries out its worklargely on the basis of papers prepared by IMF man-agement and staff.37

First Deputy Managing Director: The Fund hasthree Deputy Managing Directors, who are each re-sponsible for different aspects of the Fund’s opera-tions. Currently the First Deputy Managing Directoris assigned responsibility for, among other things,

63

Annex V Glossary

35Definition adapted from the Annual Report of the ExecutiveBoard for the Financial Year ended April 30, 1997, InternationalMonetary Fund, Washington.

36Definition adapted from advertisement for Economist Pro-gram in Finance and Development, June 1999, p. 57.

37Definition adapted from IMF, Annual Report, 1998, p. iv.


research, policy development, and policy advice tonational authorities.

Front (or Immediate) Office:See page 46, para-graph 2.

Functional Department:See page 46, paragraphs 3and 4.

G-7: Group of Seven (G-7) meetings are meetingsbetween representatives of Canada, France, Ger-many, Italy, Japan, the United Kingdom, and theUnited States. Economic and financial issues areamong the topics discussed in G-7 meetings.

G-7 Notes:In preparation for G-7 meetings, theIMF’s Research Department prepares informationnotes on world economic and market developments.

IMF Institute: The IMF Institute is the IMF’s train-ing department for officials of member countries.The Institute runs a number of economics coursesand also organizes seminars and training courses forFund staff.

IMF Staff Papers:See page 51.

Internal Memorandum:A wide variety of internalmemoranda exist in the Fund. For the purposes ofthis report, an internal memorandum is a think pieceon an issue that is for internal consumption only. Itmay be prompted by the need to explore a difficultissue that the Fund is grappling with, or to clarifyFund thinking on an issue, or to discuss an issue thatis the subject of internal debate.

International Capital Markets report: This report,prepared by the Research Department, surveys de-velopments in international financial markets. Thereport draws on discussions with commercial and in-vestment banks, securities firms, stock and futuresexchanges, regulatory and monetary authorities, andothers.38

Management:The term “management” in this reportrefers to the Managing Director, the First DeputyManaging Director, and the two Deputy ManagingDirectors.

Mission: The term “mission” is used generically inthe Fund to refer to any overseas travel related to theFund’s work. In the context of this report, however,it is used to refer specifically to the visits of teams ofIMF staff to member countries in the context of Arti -cle IV consultations, programs, or technical assis-tance.

Mission Chief:A mission chief is the staff memberwho leads the team of staff on a mission (seeabove).

Occasional Papers: See page 51.

Policy Discussion Paper:See page 51.

Program:A program is a detailed economic packagebased on the analysis of the economic problems of themember country. It specifies the policies being imple-mented or that will be implemented by the country inthe monetary, fiscal, external, and structural areas, asnecessary, to achieve economic stabilization and setthe basis for self-sustained growth. It is usually sup-ported by the use of Fund resources, and therefore in-cludes criteria that the members must adhere to as acondition for the use of Fund resources.

Research Assistant:A research assistant helps econo-mist staff with various aspects of their data and com-puter work. Tasks might include comparing and eval-uating alternative data sources, and ensuringconsistency of data series and definitions; providingsupport in maintaining fully documented data files;performing various computations, preparing charts,and formatting tables to Fund standards; and execut-ing computer programs for statistical and econometricanalysis in support of policy work. Qualifications forthe job generally include completion of a universitydegree program in economics, or equivalent, withgood knowledge of statistics and econometrics.

Review Process:See Annex III, page 60.

Surveillance: Surveillance refers to all aspects of theFund’s monitoring, analysis of, and advice concern-ing the policies and prospects of individual membercountries and the world economy. The IMF exer-cises surveillance through both multilateral and bi-lateral means. Multilateral surveillance consists ofExecutive Board review of developments in the in-ternational monetary system based principally on thestaff ’s World Economic Outlook reports and throughperiodic discussions of developments, prospects,and key policy issues in international capital mar-kets. Bilateral surveillance takes the form of consul-tations with individual member countries, conductedannually for most members, under Article IV of theIMF’s Articles of Agreement.39

Visiting Scholar:Visiting scholars are academics(and sometimes policymakers) who are paid by theFund to come to the Fund for a period of time toconduct research and interact with Fund staff. In theResearch Department, visiting scholars typicallycome to the Fund for between two and four weeks.Some departments specifically set aside resourcesfor visiting scholars; others fund visiting scholarsout of their accumulated vacancies. Decisions aboutwho to invite are made by individual departments.

Working Group on Fund Policy Advice:See pages59–50, paragraphs 27–32.

64

38Definition adapted from International Capital Markets, Sep-tember 1998, Preface, p. ix. 39Taken from IMF, Annual Report, 1998, Chapter VI, p. 33.

Annex V

Working Paper:The Working Paper series featuresoriginal research by Fund staff, consultants, and vis-iting scholars. The length of a Working Paper, exceptfor review articles, should not normally exceed 25single-spaced pages (including figures, tables, andappendices).

World Economic Outlook:The World Economic Out-look (WEO) is generally produced twice annually. It is

prepared by the Research Department, drawing oninput from all Fund departments, primarily from theinformation they receive through their consultationswith member countries. The WEO contains the IMF’sprojections for a number of economic variables in itsmember countries, both individually and in variousdifferent aggregates. It also contains an analysis of thetrends, policies, and issues underlying the projections.

65


Miscellaneous

“IMF Economist Program,” 1999, Finance and Devel-opment, Vol. 36 (June), p. 57.

Interdepartmental Working Group on Fund Policy Ad-vice, 1993, Review of Research Activities in theFund, SM/93/242.

———, 1998, “Research Activities of the InternationalMonetary Fund, January 1991–December 1997.”

International Monetary Fund, 1993, Annual Report ofthe Executive Board for the Financial Year EndedApril 30, 1997.

———, 1998a, Articles of Agreement.———, 1998b, International Capital Markets: Devel-

opments, Prospects, and Key Policy Issues, WorldEconomic and Financial Surveys.

Papers on Inflation Targeting

Working Papers and PPAAs

Baumgartner, Josef, and Ramana Ramaswamy, 1996,“Inflation Targeting in the United Kingdom: Infor-mational Content of Financial and Monetary Vari-ables,” IMF Working Paper 96/44.

Christoffersen, Peter F., and Robert F. Wescott, 1999,“Is Poland Ready for Inflation Targeting?” IMFWorking Paper 99/41.

Debelle, Guy, 1997, “Inflation Targeting in Practice,”IMF Working Paper 97/35.

———, and Cheng Hoon Lim, 1998, “PreliminaryConsiderations of an Inflation Targeting Frame-work for the Philippines,” IMF Working Paper98/39.

Gonzalez-Hermosillo, Brenda, and Takatoshi Ito,1997, “The Bank of Canada’s Monetary PolicyFramework: Have Recent Changes EnhancedCentral Bank Credibility?” IMF Working Paper97/171.

Green, John, 1996, “Inflation Targeting: Theory and Policy Implications,” IMF Working Paper96/65.

Hoffmaister, Alexander, 1999, “Inflation Targeting inKorea: An Empirical Exploration,” IMF WorkingPaper 99/7.

Lane, Timothy, Alessandro Prati, and Mark Griffiths,1995, “An Inflation Targeting Framework forItaly,” IMF PPAA 95/4.

Masson, Paul, Miguel Savastano, and Sunil Sharma,1997, “The Scope for Inflation Targeting in De-veloping Countries,” IMF Working Paper 97/130.

Selected Issues

Dunaway, Steve, and others, 1999, Canada: SelectedIssues, IMF Staff Country Report No. 99/14.

Lane, Timothy, Skander Van den Heuvel, and others,1998, United Kingdom: Selected Issues, IMF Staff Country Report No. 98/04. Also pub-lished as “The United Kingdom’s Experience withInflation Targeting,” IMF Working Paper 98/87.

Samiei, Hossein, Jan Kees Martijn, Zenon Kontolemis,and Leonardo Bartolini, 1999, “United Kingdom:Selected Issues,” IMF Staff MemorandumSM/99/43.

30 Randomly Selected Working Papers from 1998

Bayoumi, Tamim, David T. Coe, and Douglas Laxton,“Liberating Supply: Fiscal Policy and Technologi-cal Innovation in a Multicountry Model,” IMFWorking Paper 98/95.

Begum, Jahanara, “Correlations Between Real InterestRates and Output in a Dynamic InternationalModel: Evidence from G-7 Countries,” IMFWorking Paper 98/179.

Blejer, Mario I., and Liliana Schumacher, “CentralBank Vulnerability and the Credibility of Com-mitments: A Value-at-Risk Approach to CurrencyCrises,” IMF Working Paper 98/65.

Chan-Lau, Jorge, “Monetary Policy in a Small OpenEconomy with Credit Goods Production,” IMFWorking Paper 98/153.

Crafts, Nicholas, “East Asian Growth Before and Afterthe Crisis,” IMF Working Paper 98/137.

Cubeddu, Luis, “The Intragenerational RedistributiveEffects of Unfunded Pension Programs,” IMFWorking Paper 98/180.

Debelle, Guy, and Cheng Hoon Lim, “Preliminary Con-siderations of an Inflation Targeting Framework forthe Philippines,” IMF Working Paper 98/39.

Dell’Ariccia, Giovanni, “Exchange Rate Fluctuationsand Trade Flows: Evidence from the EuropeanUnion,” IMF Working Paper 98/107.

———, and Pietro Garibaldi, “Bank Lending and Inter-est Rate Changes in a Dynamic Matching Model,”IMF Working Paper 98/93.

De Fiore, Forella, “The Transmission of Monetary Pol-icy in Israel,” IMF Working Paper 98/114.

Guergil, Martine, and Martin Kaufman, “Competitive-ness and the Evolution of the Real Exchange Ratein Chile,” IMF Working Paper 98/58.

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Bibliography (Selected)

Bibliography (Selected)

Gupta, Sanjeev, Hamid Davoodi, and Rosa Alonso-Terme, “Does Corruption Af fect Income Inequal-ity and Poverty?” IMF Working Paper 98/76.

Haque, Nadeem Ul, and Abbas Mirakhor, “The De-sign of Instruments for Government Finance inan Islamic Economy,” IMF Working Paper98/54.

Haque, Nadeem Ul, and Mohsin S. Khan, “Do IMF-Supported Programs Work? A Survey of theCross-Country Empirical Evidence,” IMF Work-ing Paper 98/169.

Havrylyshyn, Oleh, Ivailo Izvorski, and Ron vanRooden, “Recovery and Growth in TransitionEconomies, 1990–97: A Stylized RegressionAnalysis,” IMF Working Paper 98/141.

Heijdra, Ben, and Jenny Ligthart, “The DynamicMacroeconomic Effects of Tax Policy in an Over-lapping Generations Model,” IMF Working Paper98/182.

Ize, Alain, and Eduardo Levy-Yeyati, “Dollarization ofFinancial Intermediation: Causes and Policy Im-plications,” IMF Working Paper 98/28.

Johnston, Barry R., and Natalia T. Tamirisa, “Why DoCountries Use Capital Controls?” IMF WorkingPaper 98/181.

Kuijs, Louis, “Determinants of Inflation, ExchangeRate, and Output in Nigeria,” IMF Working Paper98/160.

Lane, Timothy, and Skander Van Den Heuvel, “TheUnited Kingdom’s Experience with Inflation Tar-geting,” IMF Working Paper 98/87.

Ligthart, Jenny, “The Macroeconomic Effects of Envi-ronmental Taxes: A Closer Look at the Feasibility of‘Win-Win’ Outcomes,” IMF Working Paper 98/75.

Lopez-Mejia, Alejandro, and Juan Ricardo Ortega,“Private Saving in Colombia,” IMF WorkingPaper 98/171.

Lye, Jenny N., and others, “Parametric DistributionalFlexibility and Conditional Variance Models withan Application to Hourly Exchange Rates,” IMFWorking Paper 98/29.

Mikkelsen, Jan G., “AModel for Financial Program-ming,” IMF Working Paper 98/80.

Morales, Armando, “Exchange Rate Uncertainty inMoney-Based Stabilization Programs,” IMFWorking Paper 98/3.

Repkine, Alexander, and Patrick P. Walsh, “EuropeanTrade and Foreign Direct Investment U-ShapingIndustrial Output in Central and Eastern Europe:Theory and Evidence,” IMF Working Paper98/150.

Ricci, Luca Antonio, “Uncertainty, Flexible ExchangeRates, and Agglomeration,” IMF Working Paper98/9.

Van Elkan, Rachel, “From Autarky to Integration: Imi-tation, Foreign Borrowing, and Growth,” IMFWorking Paper 98/140.

Zebregs, Harm, “Can the Neoclassical Model Explainthe Distribution of Foreign Direct Investment

Across Developing Countries?” IMF WorkingPaper 98/139.

Zettelmeyer, Jeromin, “The Uzbek Growth Puzzle,”IMF Working Paper 98/133.

Research Considered by Departments to Be Their Best Work in 1998

African

“Inflation, Money Demand, and Purchasing PowerParity in South Africa,” by Gunnar Jonsson, partof Executive Board Paper SM/98/164.

Asia and Pacific

Baig, Taimur, and Ilan Goldfajn, “Financial MarketContagion in the Asian Crisis,” IMF WorkingPaper 98/155.

Goldfajn, Ilan, and Taimur Baig, “Monetary Policy inthe Aftermath of Currency Crises: The Case ofAsia,” IMF Working Paper 98/170.

Goldfajn, Ilan, and Poonam Gupta, “Does MonetaryPolicy Stabilize the Exchange Rate Following aCurrency Crisis?” IMF Working Paper 99/42.

European I

Christofferson, Peter F., and Peter Doyle, “From Infla-tion to Growth: Eight Years of Transition,” IMFWorking Paper 98/100.

European II

Aitken, Brian, “Falling Tax Compliance and the Riseof the Virtual Budget in Russia,” forthcoming IMFWorking Paper.

Fiscal Affairs

Chalk, Nigel, “Fiscal Sustainability with Non-Renew-able Resources,” IMF Working Paper 98/26.

Gupta, Sanjeev, Marijn Verhoeven, and Erwin Tiong-son, “Does Higher Government Spending BuyBetter Results in Education and Health Care?”IMF Working Paper 99/21.

Kopits, George, and Steven Symansky, Fiscal PolicyRules, IMF Occasional Paper No. 162.

“Revenue Implications of Trade Liberalization:Overview” and “Revenue Implications of TradeLiberalization,” Executive Board Paper SM/98/254and Supplement 1.

Zee, Howell, “Taxation of Financial Capital in a Global-ized Environment: The Role of Withholding Taxes,”National Tax Journal, Vol. 51, No. 3, 1998.

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IMF Institute

Senhadji, Abdelhak, “Time-Series Estimation of Struc-tural Import Demand Equations: A Cross-CountryAnalysis,” Staff Papers, Vol. 45 (June 1998).

Monetary and Exchange Affairs

Hardy, Daniel, “Anticipation and Surprises in CentralBank Interest Rate Policy,” Staff Papers, Vol. 45(December 1998).

Levy Yeyati, Eduardo, and Angel Ubide, “Crises, Con-tagion, and the Closed-End Country Fund Puz-zle,” IMF Working Paper 98/143.

Middle Eastern

Handy, Howard, and a staff team, Egypt: Beyond Sta-bilization, Toward a Dynamic Market Economy,IMF Occasional Paper No. 163 (May 1998).

Nashashibi, Karim, Patricia Alonso-Gamo, StefaniaBazzoni, Alain Feler, Nicole Lafromboise, and Se-bastian Paris-Horvitz, Algeria: Stabilization andTransition to the Market, 1998, IMF OccasionalPaper No. 165.

Policy Development and Review

Ghosh, Atish Rex, and Steven Phillips, “Warning: In-flation Can Be Harmful to Your Growth,” IMFStaff Papers, Vol. 45 (December 1998).

“IMF-Supported Programs in Indonesia, Korea andThailand: A Preliminary Assessment,” ExecutiveBoard Paper EBS/98/139, August 1998.

“Involving the Private Sector in Forestalling and Re-solving Financial Crises,” Executive BoardPaper EBS/98/139, August 1998. (This was aninteresting, well-written paper, but we did not in-clude it in the evaluation because we consideredthat, although it was based on research, it was notactually a research paper.)

Research

Berg, Andersen, and Catherine Patillo, “Are CurrencyCrises Predictable? A Test,” IMF Working Paper98/154; also published in IMF Staff Papers, Vol.46 (June 1999).

Flood, Robert, and Nancy Marion, “Perspectives onthe Recent Currency Crisis Literature,” IMFWorking Paper 98/130 (this excellent paper wasexcluded from the evaluation).

Kodres, Laura, and Christian Jochum, “Does the In-troduction of Futures on Emerging Market Cur-rencies Destabilize the Underlying Currencies?”IMF Working Paper 98/13; also published inStaff Papers, Vol. 45 (September 1998).

Mauro, Paulo, and Antonio Spilimbergo, “How Do theSkilled and the Unskilled Respond to RegionalShocks? The Case of Spain,” IMF Working Paper98/77; also published in IMF Staff Papers, Vol. 46(March 1999), pp. 1–7.

Western Hemisphere

Catão, Luis, “Intermediation Spreads in a Dual Cur-rency Economy: Argentina in the 1990s,” IMFWorking Paper 98/90 (June 1998).

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external evaluation of imf economic research activities ...part 2 report of the external evaluation...

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