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Sudden Stops and IMF-Supported Programs

In: Financial Markets Volatility and Performance in Emerging Markets

Listed author(s):
  • Barry Eichengreen
  • Poonam Gupta
  • Ashoka Mody

Could a high-access, quick-disbursing %u201Cinsurance facility%u201D in the IMF help to reduce the incidence of sharp interruptions in capital flows (%u201Csudden stops%u201D)? We contribute to the debate on this question by analyzing the impact of conventional IMF-supported programs on the incidence of sudden stops. Correcting for the non-random assignment of programs, we find that sudden stops are fewer and generally less severe when an IMF arrangement exists and that this form of %u201Cinsurance%u201D works best for countries with strong fundamentals. In contrast there is no evidence that a Fund-supported program attenuates the output effects of capital account reversals if these nonetheless occur.

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This chapter was published in:
  • Sebastian Edwards & Márcio G. P. Garcia, 2008. "Financial Markets Volatility and Performance in Emerging Markets," NBER Books, National Bureau of Economic Research, Inc, number edwa05-1, Enero-Jun.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 4779.
    Handle: RePEc:nbr:nberch:4779
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