Interestingly, what made the IMF so receptive to these ideas, apart from the changing intellectual climate of economic concepts and the tenor of 1990s graduate training in economics, was the then forty-year-old monetary model that the IMF used to examine the effects of its policies, the so-called Polak model. When the IMF was formed in the late 1940s to help countries with balance-of-payments problems through short-term financing of their deficits, the IMF needed to figure out how changes in a country’s exports and imports, bank credit, and foreign reserves interact over time such that the offsetting financing given to states (IMF loans) would provide the maximum bang for the proverbial buck. The result was the Polak model, the underlying assumptions of which tended to the austere rather than the reflationary.

Mark Blyth, Austerity, loc. 441