Austerity versus Stimulus? Understanding Fiscal Policy Change at the International Monetary Fund Since the Great Recession

Abstract

Since 2008, the International Monetary Fund (IMF) has become more open to the use of discretionary fiscal stimulus packages to deal with recessions, while changing its doctrine on the timing and content of fiscal consolidation. The article traces this evolution of the Fund's doctrine to staff politics, more diverse thinking in mainstream economics, and a careful framing of the message through the use of mainstream macroeconomic models. To map the changing contours of institutional views on fiscal policy through 2008–2013, the article undertakes a detailed content analysis of official publications from the Fiscal Affairs Department and the Research Department. The connection between these shifts and significant personnel shake‐ups is demonstrated through an extensive biographical analysis of the authors of all IMF studies cited in the official reports of the two departments. The findings contribute to the emerging debate on the sources of intellectual and policy change in international economic organizations.