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Sudden Stops and IMF-Supported Programs

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12235.

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Date of creation: May 2006
Publication status: published as Sudden Stops and IMF-Supported Programs , Barry Eichengreen, Poonam Gupta, Ashoka Mody. in Financial Markets Volatility and Performance in Emerging Markets , Edwards and Garcia. 2008
Handle: RePEc:nbr:nberwo:12235
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