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Keeping Capital Flowing; The Role of the IMF

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  • Michael D. Bordo
  • Ashoka Mody
  • Nienke Oomes

Abstract

In this paper, we examine the IMF's role in maintaining the access of emerging market economies to international capital markets. We find evidence that both macroeconomic aggregates and capital flows improve following the adoption of an IMF-supported program, although they may initially deteriorate somewhat. Consistent with theoretical predictions and earlier empirical findings, we find that IMF-supported programs are most successful in improving capital flows to countries with bad, but not very bad fundamentals. In such countries, IMF-supported programs are also associated with improvements in the fundamentals themselves.

Suggested Citation

  • Michael D. Bordo & Ashoka Mody & Nienke Oomes, 2004. "Keeping Capital Flowing; The Role of the IMF," IMF Working Papers 04/197, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/197
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Eichengreen, Barry & Kletzer, Kenneth & Mody, Ashoka, 2006. "The IMF in a world of private capital markets," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1335-1357, May.
    2. Das, Udaibir S. & Papaioannou, Michael G. & Trebesch, Christoph, . "Sovereign Default Risk and Private Sector Access to Capital in Emerging Markets," Chapters in Economics, University of Munich, Department of Economics.
    3. Koen J. M. van der Veer & Eelke de Jong, 2013. "IMF-Supported Programmes: Stimulating Capital to Non-defaulting Countries," The World Economy, Wiley Blackwell, vol. 36(4), pages 375-395, April.
    4. Carlos de Resende, 2007. "IMF-Supported Adjustment Programs: Welfare Implications and the Catalytic Effect," Staff Working Papers 07-22, Bank of Canada.
    5. Rockoff, Hugh & White, Eugene N., 2012. "Monetary Regimes and Policy on a Global Scale: The Oeuvre of Michael D. Bordo," MPRA Paper 49672, University Library of Munich, Germany, revised May 2013.
    6. Molly Bauer & Cesi Cruz & Benjamin Graham, 2012. "Democracies only: When do IMF agreements serve as a seal of approval?," The Review of International Organizations, Springer, vol. 7(1), pages 33-58, March.
    7. Jun I Kim, 2006. "IMF-Supported Programs and Crisis Prevention; An Analytical Framework," IMF Working Papers 06/156, International Monetary Fund.
    8. Hagen, Rune Jansen, 2009. "Basic analytics of multilateral lending and surveillance," Journal of International Economics, Elsevier, vol. 79(1), pages 126-136, September.
    9. Ali J Al-Sadiq, 2015. "The Impact of IMF-Supported Programs on FDI in Low-income Countries," IMF Working Papers 15/157, International Monetary Fund.
    10. Jun I Kim, 2007. "Unconditional IMF Financial Support and Investor Moral Hazard," IMF Working Papers 07/104, International Monetary Fund.
    11. Uma Ramakrishnan & Juan Zalduendo, 2006. "The Role of IMF Support in Crisis Prevention," IMF Working Papers 06/75, International Monetary Fund.
    12. Bjoern Rother & Ivetta Hakobyan & Monica B de Bolle, 2006. "The Level and Composition of Public Sector Debt in Emerging Market Crises," IMF Working Papers 06/186, International Monetary Fund.
    13. Calixte Ahokpossi & Laurence Allain & Giovanna Bua, 2014. "A Constrained Choice? Impact of Concessionality Requirements on Borrowing Behavior," IMF Working Papers 14/176, International Monetary Fund.
    14. Stephen Nelson, 2010. "Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law," The Review of International Organizations, Springer, vol. 5(2), pages 107-139, June.
    15. Graham Bird & Dane Rowlands, 2007. "The Analysis of Catalysis: IMF Programs and Private Capital Flows," School of Economics Discussion Papers 0107, School of Economics, University of Surrey.

    More about this item

    Keywords

    Capital flows; Emerging markets; International Monetary Fund; catalytic finance; capital markets; international capital markets; international capital; access to international capital; International Monetary Arrangements and Institutions;

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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