The Politics of Hard Choices: IMF Programs and Government Spending

A central component of International Monetary Fund (IMF) programs is reducing government budget deficits. We ask how domestic political considerations shape the distribution of cuts made by governments in IMF programs. Our central finding is that IMF programs shrink the role played by domestic politics. While democracies allocate larger shares of their budgets to public services in the absence of IMF programs, the difference between democracies and nondemocracies disappears under IMF programs. This result has important implications for our understanding of government spending priorities under different resource constraints.We dedicate this article to the memory of Harold K. Jacobson. Robert Kaufman, Lisa Martin, Joan Nelson, and two anonymous reviewers for IO provided valuable comments on earlier drafts, and Chris Achen, Chris Adolph, Leah Anderson, Carew Boulding, Sarah Brooks, Chelsea Brown, Lawrence Broz, Eric Chang, Dan Corstange, Rob Franzese, Nate Jensen, Marcus Kurtz, Margaret Levi, Autumn Payton, Nita Rudra, Heidi Sherman, and James Vreeland offered helpful advice. We thank Autumn Payton for research assistance. Earlier versions were presented at the 2004 Midwest Political Science Association Meetings, the 2004 American Political Science Association Meetings, the 2005 workshop on Distributive Politics and Social Protection in the 21st Century at Ohio State s Mershon Center, and the 2005 International Studies Association Meetings. All errors remain our own.