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Banking on seniority: the IMF and the sovereign’s creditors

Author

Listed:
  • Erce, Aitor

    (Bank of Spain)

Abstract

The programs designed by the International Monetary Fund during the Global Financial Crisis have shown more awareness of the importance of domestic demand for the prospects of economic recovery. Yet, the IMF has continued to do little about the late payments made by governments to domestic creditors and suppliers. In contrast, the greater protection historically awarded by the IMF to foreign creditors has endured throughout the recent crisis. The paper suggests that, in order to adequately balance foreign creditor seniority and growth objectives, the IMF may sometimes need to emphasize equitable burden-sharing across categories of creditors rather than privilege the interests of international bond markets.

Suggested Citation

  • Erce, Aitor, 2014. "Banking on seniority: the IMF and the sovereign’s creditors," Globalization and Monetary Policy Institute Working Paper 175, Federal Reserve Bank of Dallas.
  • Handle: RePEc:fip:feddgw:175
    DOI: 10.24149/gwp175
    Note: Published as: Erce, Aitor (2015), "Banking on Seniority: The IMF and the Sovereign’s Creditors," Governance 28 (2): 219-236.
    as

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    File URL: http://www.dallasfed.org/assets/documents/institute/wpapers/2014/0175.pdf
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    References listed on IDEAS

    as
    1. repec:nbr:nberch:13342 is not listed on IDEAS
    2. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521816755, May.
    3. Broner, Fernando & Erce, Aitor & Martin, Alberto & Ventura, Jaume, 2014. "Sovereign debt markets in turbulent times: Creditor discrimination and crowding-out effects," Journal of Monetary Economics, Elsevier, vol. 61(C), pages 114-142.
    4. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521016957, May.
    5. Aitor Erce, 2012. "Selective sovereign defaults," Globalization and Monetary Policy Institute Working Paper 127, Federal Reserve Bank of Dallas.
    6. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    7. Pablo Hernández de Cos & Enrique Moral-Benito, 2016. "Fiscal multipliers in turbulent times: the case of Spain," Empirical Economics, Springer, vol. 50(4), pages 1589-1625, June.
    8. Lucio SIMPSON, 2006. "The Role Of The Imf In Debt Restructurings: Lending Into Arrears, Moral Hazard And Sustainability Concerns," G-24 Discussion Papers 40, United Nations Conference on Trade and Development.
    9. Raffer, Kunibert, 1990. "Applying chapter 9 insolvency to international debts: An economically efficient solution with a human face," World Development, Elsevier, vol. 18(2), pages 301-311, February.
    10. Javier Díaz-Cassou & Aitor Erce-Domínguez & Juan J. Vázquez-Zamora, 2008. "The role of the IMF in recent sovereign debt restructurings: Implications for the policy of lending into arrears," Occasional Papers 0805, Banco de España;Occasional Papers Homepage.
    11. Easterly, William, 2005. "What did structural adjustment adjust?: The association of policies and growth with repeated IMF and World Bank adjustment loans," Journal of Development Economics, Elsevier, vol. 76(1), pages 1-22, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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