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Vulnerability, Crisis and Debt Maturity: do IMF Interventions Shorten the Length of Borrowing?

  • Diego Saravia

This paper studies how IMF lending affects countries' bonds maturity. Debt maturity was claimed to be one of the causes of the crisis of recent years: Too much short-term debt would be the seed of self-fulfilling crises. In turn, one of the goals of the IMF is to prevent crises and to alleviate their effects once they occur. I find that IMF interventions shorten the length of countries' borrowing which is a non desirable, and not analyzed, consequence of IMF lending. Moreover, this finding is consistent with the implications of this Institution's senior status in its lending.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 600.

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Date of creation: Nov 2010
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Handle: RePEc:chb:bcchwp:600
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  1. Rajan, Raghuram G, 1992. " Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, vol. 47(4), pages 1367-400, September.
  2. 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.
  3. Diamond, Douglas W., 1993. "Seniority and maturity of debt contracts," Journal of Financial Economics, Elsevier, vol. 33(3), pages 341-368, June.
  4. Rataporn Deesomsak & Krishna Paudyal & Gioia Pescetto, 2007. "Debt Maturity Structure and the 1997 Asian Financial Crisis," Working Papers 2007_01, Durham University Business School.
  5. Ashoka Mody & Diego Saravia, 2006. "Catalysing Private Capital Flows: Do IMF Programmes Work as Commitment Devices?," Economic Journal, Royal Economic Society, vol. 116(513), pages 843-867, 07.
  6. Barry J. Eichengreen & Poonam Gupta & Ashoka Mody, 2006. "Sudden Stops and IMF-Supported Programs," IMF Working Papers 06/101, International Monetary Fund.
  7. Graham Bird & Dane Rowlands, 2001. "IMF lending: how is it affected by economic, political and institutional factors?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 4(3), pages 243-270.
  8. Axel Dreher & Silvia Marchesi & James Vreeland, 2008. "The political economy of IMF forecasts," Public Choice, Springer, vol. 137(1), pages 145-171, October.
  9. Diego Saravia, 2009. "On The Role and Effects of IMF Seniority," Working Papers Central Bank of Chile 538, Central Bank of Chile.
  10. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June.
  11. Leung, S.F. & Yu, S., 1992. "On the Choice Between Sample Selection and Two-Part Models," RCER Working Papers 337, University of Rochester - Center for Economic Research (RCER).
  12. Marchesi, Silvia & Thomas, Jonathan P, 1999. "IMF Conditionality as a Screening Device," Economic Journal, Royal Economic Society, vol. 109(454), pages C111-25, March.
  13. Ran Bi, 2006. "Debt Dilution and Maturity Structure of Sovereign Bonds," 2006 Meeting Papers 652, Society for Economic Dynamics.
  14. Wasseem Mina & Jorge Martinez-Vazquez, 2002. "IMF Lending, Maturity of International Debt and Moral Hazard," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0301, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  15. Barry Eichengreen & Ashoka Mody, 2004. "Do Collective Action Clauses Raise Borrowing Costs?," Economic Journal, Royal Economic Society, vol. 114(495), pages 247-264, 04.
  16. Demirguc-Kunt, Asli & Maksimovic, Vojislav, 1999. "Institutions, financial markets, and firm debt maturity," Journal of Financial Economics, Elsevier, vol. 54(3), pages 295-336, December.
  17. Dani Rodrik & Andres Velasco, 1999. "Short-Term Capital Flows," NBER Working Papers 7364, National Bureau of Economic Research, Inc.
  18. Barry Eichengreen, 2003. "Restructuring Sovereign Debt," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 75-98, Fall.
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