Do IMF and IBRD Cause Moral Hazard and Political Business Cycles? Evidence from Panel Data
Using panel data for 94 countries in 1975â€“97, we estimate OLS, 2SLS and GMM regressions to explain IMF and IBRD lending as well as monetary and fiscal policies in the recipient countries. With respect to moral hazard, we find that a country's government budget deficit and its rate of monetary expansion are higher the larger its borrowing potential in the Fund. New net lending of the Bank (relative to GDP) raises monetary expansion but lowers budget deficits of the recipient countries while new net credit from the Fund is associated with less expansionary policies. As for political business cycles, our evidence indicates that new net credits from the IMF are significantly larger prior to elections and that borrowing from the IBRD is significantly smaller after elections. Copyright Kluwer Academic Publishers 2004
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Diamond, Douglas W. & Rajan, Raghuram G., 2001.
"Banks, short-term debt and financial crises: theory, policy implications and applications,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 54(1), pages 37-71, June.
- Douglas W. Diamond & Raghuram G. Rajan, . "Banks, Short Term Debt and Financial Crises: Theory, Policy Implications and Applications."," CRSP working papers 518, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Douglas W. Diamond & Raghuram G. Rajan, 2000. "Banks, Short Term Debt and Financial Crises: Theory, Policy Implications and Applications," NBER Working Papers 7764, National Bureau of Economic Research, Inc.
- Nash, John & DEC, 1993. "Implementation of trade reform in sub-Saharan Africa : how much heat and how much light?," Policy Research Working Paper Series 1218, The World Bank.
- Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-70.
- Sebastian Edwards & Julio A. Santaella, 1992.
"Devaluation Controversies in the Developing Countries: Lessons From the Bretton Woods Era,"
NBER Working Papers
4047, National Bureau of Economic Research, Inc.
- Sebastian Edwards & Julio Santaella, 1993. "Devaluation Controversies in the Developing Countries: Lessons from the Bretton Woods Era," NBER Chapters, in: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, pages 405-460 National Bureau of Economic Research, Inc.
- Barro, Robert J. & Lee, Jong-Wha, 2005.
"IMF programs: Who is chosen and what are the effects?,"
Journal of Monetary Economics,
Elsevier, vol. 52(7), pages 1245-1269, October.
- Robert J. Barro & Jong-Wha Lee, 2002. "IMF Programs: Who is Chosen and What Are the Effects?," NBER Working Papers 8951, National Bureau of Economic Research, Inc.
- Robert J Barro & Jong-Wha Lee, 2003. "IMF Programs: Who Is Chosen and What Are the Effects?," Departmental Working Papers 2003-09, The Australian National University, Arndt-Corden Department of Economics.
- Joyce, Joseph P., 1992. "The economic characteristics of IMF program countries," Economics Letters, Elsevier, vol. 38(2), pages 237-242, February.
- Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 495-526, April.
- Tony Killick & Moazzam Malik & Marcus Manuel, 1992. "What Can We Know About the Effects of IMF Programmes?," The World Economy, Wiley Blackwell, vol. 15(5), pages 575-598, 09.
- Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
- Michael Hutchison, 2003.
"A Cure Worse Than the Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs,"
in: Managing Currency Crises in Emerging Markets, pages 321-360
National Bureau of Economic Research, Inc.
- Michael M. Hutchison, . "A Cure Worse Than The Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs," EPRU Working Paper Series 01-09, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Michael M. Hutchison, 2001. "A Cure Worse Than the Disease? Currency Crises and the Output Costs of IMF-Supported Stabilization Programs," NBER Working Papers 8305, National Bureau of Economic Research, Inc.
- Jurg Niehans, 1985. "International debt with unenforceable claims," Economic Review, Federal Reserve Bank of San Francisco, issue Win, pages 64-79.
- Conway, Patrick, 1994. "IMF lending programs: Participation and impact," Journal of Development Economics, Elsevier, vol. 45(2), pages 365-391, December.
- Axel Dreher, 2003. "The influence of elections on IMF programme interruptions," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 101-120.
- F. Rozwadowski & Siddharth Timari & David O. Robinson & Susan Schadler, 1993. "Economic Adjustment in Low-Income Countries; Experience Under the Enhanced Structural Adjustment Facility," IMF Occasional Papers 106, International Monetary Fund.
- Graham Bird & Dane Rowlands, 1997. "The Catalytic Effect of Lending by the International Financial Institutions," The World Economy, Wiley Blackwell, vol. 20(7), pages 967-991, November.
- Steven Phillips & Timothy D. Lane, 2000. "Does IMF Financing Result in Moral Hazard?," IMF Working Papers 00/168, International Monetary Fund.
- Michael P. Dooley & Jeffrey A. Frankel, 2003. "Managing Currency Crises in Emerging Markets," NBER Books, National Bureau of Economic Research, Inc, number dool03-1, May.
- Jan-Egbert Sturm & Helge Berger & Jakob de Haan, 2002. "IMF Credit: How Important Are Political Factors? A Robustness Analysis," CESifo Working Paper Series 642, CESifo Group Munich.
- Knight, Malcolm & Santaella, Julio A., 1997. "Economic determinants of IMF financial arrangements," Journal of Development Economics, Elsevier, vol. 54(2), pages 405-436, December.
- Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(03), pages 427-460, June.
- Bird, Graham & Hussain, Mumtaz & Joyce, Joseph P., 2004. "Many happy returns? Recidivism and the IMF," Journal of International Money and Finance, Elsevier, vol. 23(2), pages 231-251, March.
When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:15:y:2004:i:1:p:5-22. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.