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Do IMF-Supported Programs Boost Private Capital Inflows? the Role of Program Size and Policy Adjustment

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  • Roberto Benelli
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    Abstract

    I analyze empirically whether program size (the size of financial assistance) and policy adjustment matter for the success of IMF-supported programs. I define a program as successful if the initial program projections for net private capital flows are met or exceeded. I find that success is negatively associated with the size of financial assistance, especially in countries with market access, and that projection biases binding constraints on the amount of IMF lending may account for this association. Moreover, policy adjustment seems to have a causal positive effect on the likelihood of program success.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/231.

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    Length: 35
    Date of creation: 01 Nov 2003
    Date of revision:
    Handle: RePEc:imf:imfwpa:03/231

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    Keywords: Capital inflows; Structural adjustment; private capital; private capital flows; capital flows; private capital inflows; capital outflows; capital markets; net capital flows; private capital markets; access to private capital markets; net capital; external financing; investor confidence; investors; capital account crises; foreign currency; speculative attacks; private investors; foreign capital; private financing; inflation rate; moral hazard; current account balance; international capital flows; capital mobility; global capital markets; gross domestic product; capital market; capital account liberalization; composition of capital inflows; private flows; international investors; exogenous shocks; investment decisions; foreign direct investment; net capital outflows; foreign investors; international capital; commercial banks; bond issues; capital market access; speculative attack; capital account restrictions; capital accounts; global capital; current account deficit; indexation; interest payments;

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    1. Soojin Moon & Ales Bulir, 2003. "Do IMF-Supported Programs Help Make Fiscal Adjustment More Durable?," IMF Working Papers 03/38, International Monetary Fund.
    2. Ales Bulir & Marianne Schulze-Gattas & Atish R. Ghosh & Alex Mourmouras & A. Javier Hamann & Timothy D. Lane, 2002. "IMF-Supported Programs in Capital Account Crises," IMF Occasional Papers 210, International Monetary Fund.
    3. Hali J. Edison & Michael W. Klein & Luca Ricci & Torsten Sloek, 2002. "Capital Account Liberalization and Economic Performance: Survey and Synthesis," NBER Working Papers 9100, National Bureau of Economic Research, Inc.
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    9. Diego Saravia & Ashoka Mody, 2003. "Catalyzing Capital Flows," IMF Working Papers 03/100, International Monetary Fund.
    10. Robert J Barro & Jong-Wha Lee, 2003. "IMF Programs: Who Is Chosen and What Are the Effects?," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2003-09, The Australian National University, Arndt-Corden Department of Economics.
    11. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, Elsevier, vol. 62(2), pages 385-421, August.
    12. Ratna Sahay & Jeromin Zettelmeyer & Eduardo Borensztein & Andrew Berg, 1999. "The Evolution of Output in Transition Economies," IMF Working Papers 99/73, International Monetary Fund.
    13. Stanley Fischer, 1993. "The Role of Macroeconomic Factors in Growth," NBER Working Papers 4565, National Bureau of Economic Research, Inc.
    14. Graham Bird & Dane Rowlands, 1997. "The Catalytic Effect of Lending by the International Financial Institutions," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 20(7), pages 967-991, November.
    15. Kraay, Aart, 2003. "Do high interest rates defend currencies during speculative attacks?," Journal of International Economics, Elsevier, Elsevier, vol. 59(2), pages 297-321, March.
    16. Alberto Musso & Steven Phillips, 2002. "Comparing Projections and Outcomes of IMF-Supported Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(1), pages 3.
    17. Jason Furman & Joseph E. Stiglitz, 1998. "Economic Crises: Evidence and Insights from East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 1-136.
    18. Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, Elsevier, vol. 61(2), pages 495-526, April.
    19. Marchesi, Silvia, 2003. "Adoption of an IMF programme and debt rescheduling. An empirical analysis," Journal of Development Economics, Elsevier, Elsevier, vol. 70(2), pages 403-423, April.
    20. Knight, Malcolm & Santaella, Julio A., 1997. "Economic determinants of IMF financial arrangements," Journal of Development Economics, Elsevier, Elsevier, vol. 54(2), pages 405-436, December.
    21. Miguel A. Savastano & Michael Mussa, 1999. "The IMF Approach to Economic Stabilization," IMF Working Papers 99/104, International Monetary Fund.
    22. Curzio Giannini & Carlo Cottarelli, 2002. "Bedfellows, Hostages, or Perfect Strangers? Global Capital Markets and the Catalytic Effect of IMF Crisis Lending," IMF Working Papers 02/193, International Monetary Fund.
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