Capital Account Liberalization and the IMF: New Evidence from the Argentina Crisis

Since its inception in 1945, the goal of the International Monetary Fund (IMF) has been to prevent crises in the [international] system by encouraging countries to adopt sound economic policies. In recent decades, the Fund\u27s focal point has been on the liberalization, or opening, of financial markets to advance economic development. Previously known as the A-plus student of the IMF , Argentina provides valuable insight into the IMF\u27s policies and need for reorganization measures by raising the question of whether the IMF\u27s liberalization policies are fostering or hindering economic prosperity. The IMP is pushing capital market liberalization forward even though there is no evidence that economic growth is significantly affected by it. Moreover, since capital market liberalization has contributed to instability, such as in Argentina, the IMF needs to refocus its efforts by assisting countries through Keynesian expansionary economic measures, a proven method for lessening the severity and duration of financial crises