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Conditionality (of international donation and loans) |
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Keywords:
Conditionality, Debt, International Monetary Fund |
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Links
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Links related to Conditionality
(5 out of 34
links are shown. Complete list of links can be found at here.)
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Essential Principles of Economics: A Hypermedia Text |
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URL:
http://william-king.www.drexel.edu/top/prin/txt/EcoToC.html |
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Serving as a overview of economics for beginners, this site is based of the lecture notes of Roger Ashton McCain III, a professor of economics at Drexel University. The text's 31 chapters are divided into two sections which cover both Microeconomics and Macroeconomics. Each chapter includes an overview and multiple choice questions to quiz users's comprehension, and the text includes hypertext icons that lead to citations, observations, explanations, and equations. Professor McCain views his site as a work-in-progress as well as a textbook, and continues to revise the site. |
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Fiscal Management in Adjustment Lending |
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URL:
http://wbln0018.worldbank.org/oed/oeddoclib.nsf/e90210f184a4481b85256885007b1724/ba624541f3f17e20852567f5005d5b3d?OpenDocument |
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The study found the following points:
The principal findings of the study are that: (a) successful fiscal management requires sustained, long-term effort, (b) lower fiscal deficits are associated with faster economic growth, (c) sustained deficit reductions were achieved adjustment is primarily through revenue enhancement, while expenditure reduction targets were more elusive, and (d) the fiscal reform component of Bank-supported adjustment lending had only limited success because of the fragmented treatment of fiscal issues and the vague conditionality of loans.
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Economics Interactive Tutorials List |
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URL:
http://hadm.sph.sc.edu/Courses/Econ/Tutorials.html |
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Samuel Baker, Associate Professor in the Department of Health Administration at the University of South Carolina, has developed a series of interactive economics tutorials. The tutorials are at the level of introductory microeconomics. Lecture topics cover: demand, supply, elasticity, market equilibrium, costs,discounting, and internal rate of return. Each tutorial features Java based interactive questions and examples. Users receive immediate feedback and hints on their responses to questions. |
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Educational Materials |
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URL:
http://www.phil.frb.org/page.asp?page=educationalmat |
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Provided by the Federal Reserve Bank of Philadelphia, educational materials make this site a good source for teaching aids that bring alive the concepts of money and banking. Links to Federal Reserve Sites, curriculum materials, classroom activities and games, economics education organizations and other useful links for teachers are provided. |
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CyberEconomics |
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URL:
http://ingrimayne.saintjoe.edu/econ/TitlePage.html |
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CyberEconomics is developed by Robert Schenk, Professor of Economics at Saint Joseph's College. The site is meant to be "an interactive supplement to a principles of economics course." CyberEconomics covers most of the topics in introductory microeconomics and macroeconomics. A short explanation of each topic is provided and at the end of each topic there is a review section consisting of multiple choice questions to test the reader's understanding. CyberEconomics features an index of all of the topics addressed at the site, allowing readers to go directly to their topic of interest. Each terms in the glossary is accompanied with a detailed text as an explanation. It can be considered as an online textbook. |
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Untitled Document
Links related to Debt
(4 out of 4
links are shown. Complete list of links can be found at here.)
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Fiscal Management in Adjustment Lending |
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URL:
http://wbln0018.worldbank.org/oed/oeddoclib.nsf/e90210f184a4481b85256885007b1724/ba624541f3f17e20852567f5005d5b3d?OpenDocument |
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The study found the following points:
The principal findings of the study are that: (a) successful fiscal management requires sustained, long-term effort, (b) lower fiscal deficits are associated with faster economic growth, (c) sustained deficit reductions were achieved adjustment is primarily through revenue enhancement, while expenditure reduction targets were more elusive, and (d) the fiscal reform component of Bank-supported adjustment lending had only limited success because of the fragmented treatment of fiscal issues and the vague conditionality of loans.
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3380
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Accepting IMF Conditionality: The Key Indicator of an Indebted Country's Commitment to Reform |
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URL:
http://www.res.org.uk/media/Confrep/marchesi.htm |
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This link is an article which states the effectiveness of conditionality as a key indicator of an indebted country's commitment to reform.
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Cities continue to out-pace centre in debt management |
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URL:
http://biz.yahoo.com/ifc/ru/news/100900-1.html |
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It is a news of Russia from Yahoo. A country's sovereign credit rating usually places a cap on the ratings that other national borrowers can enjoy, but in Russia sub-sovereign borrowers such as cities have of late been considered more creditworthy than the federal government. |
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Napocor needs $300M for capex, debt servicing |
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URL:
http://www.inquirer.net/issues/nov2000/nov21/business/bus_5.htm |
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It is a business news written by Christine A. Gaylican from Inquirer News Service. NATIONAL Power Corp. is in need of about $300 million in fresh funds to partly finance its capital expenditure next year and pay off loans maturing next year worth $144 million.The official expressed concern over the downgrading of the country's credit rating by Standard & Poor's, which automatically reflects on state-owned corporations. |
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Untitled Document
Links related to International Monetary Fund
(5 out of 118
links are shown. Complete list of links can be found at here.)
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IMF Committee on Balance of Payments Statistics - Annual Report |
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URL:
http://www.imf.org/external/bopage/arindex.htm |
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The web site provides the IMF Committee on Balance of Payments Statistics Annual Report 1995-1999.
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International Monetary Fund WP99120: Measuring Misalignment - Purchasing Power Parity and East Asian Currencies in the 1990s |
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URL:
http://www.imf.org/external/pubs/ft/wp/1999/wp99120.pdf |
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The concept of purchasing power parity (PPP) is used to evaluate whether eight East Asian currencies were overvalued on the eve of the 1997 crises. The Johansen and Horvath-Watson co-integration test procedures are applied to bilateral and multilateral exchange rates, deflated using CPIs, producer price indices (PPIs), and price indices of export goods. The second deflator yields the greatest evidence of "stationarity". The study find's that the Malaysian, Philippines, and Thai currencies were overvalued, while the Korean and Indonesian were substantially undervalued. Mixed results were obtained for the others. Measures of the equilibrium rate based on time trends in CPI-deflated rates typically suggest larger overvaluations. |
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NBER Working Paper No. W7361: Banks, the IMF, and the Asian Crisis |
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URL:
http://papers.nber.org/papers/W7361.pdf |
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This paper examines the impact of the Asian crisis on bank stocks across four Western countries and six Asian countries. In the second half of 1997, Western banks experienced positive returns. In contrast East Asian bank indices incurred losses in excess of 60% in each of the crisis countries. Most of this poor performance is explained by the exposure of the banks to general stock market movements in their countries. Currency exposures affected banks adversely beyond their stock market impact only in Indonesia and the Philippines. Except for the Korean program, IMF programs had little effect on bank values. The announcement of the Korean program increased shareholder wealth at the U.S. banks with the highest reported exposure in Korea by about 7% and had a favorable effect on bank shareholder wealth in all the countries in our sample but one. There is no evidence that the Korean IMF program had a positive impact on banks without exposure to Korea and hence our results do not support the argument that such programs reduce systemic risk.
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International Monetary Fund Working Paper 99122: Inflation, Money Demand, and Purchasing Power Parity in South Africa |
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URL:
http://www.imf.org/external/pubs/ft/wp/1999/wp99122.pdf |
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This empirical study for South Africa indicates that there exists a stable money demand type of relationship among domestic prices, broad money, real income, and interest rates, as well as a long-run relationship among domestic prices, foreign prices, and the norminal exchange rate. In the short run, shocks to the nominal exchange rate affect domestic prices but have virtually no impact on real output, while shocks to broad money have a temporary impact on real output before becoming inflationary. Both types of shocks seem to trigger a monetary policy response, since the short-term interest rate adjusts quickly. |
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Case Studies on Recent Banking Crisis in Asia |
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URL:
http://www.oenb.at/ost-west-konverenz/reden/ostwest-hubertneiss.htm |
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This presentation explores the Asian experience of banking crises over the last decade. It illustrates this by comparing and contrasting the experience of countries at the heart of the so-called Asian crisis, since mid-1997, with the prolonged crisis experience of Japan since the late 1980s.
In both cases, the presentation examines the factors that contributed to the build up of vulnerabilities in the wider economy and the financial system. It details the stages leading up to the Asian crisis and its outbreak, with specific reference to the stabilization policies employed to address the crisis. The presentation then explores the detailed and wide ranging measures implemented to restructure the regions shattered financial systems, indicating the prospects for future progress and the costs of the efforts undertaken.
The presentation then examines the foundations of the banking crisis in Japan and the events that eventually prompted concerted public action to restructure the financial system there.
In conclusion, the presentation identifies key lessons to be learned from the Asian experience of banking crises, from both a crisis management and crisis prevention perspective, if future crises are to be avoided.
The full document in PDF format can be downloaded. |
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References
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References related to Conditionality
(17 references
are shown.)
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The Effectiveness of Conditionality and the Political Economy of Policy Reform: Is It Simply a Matter of Political Will?
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Author:
Bird, Graham
Book: Journal of Policy Reform |
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Year:
1998 Vol: 2(1), pages 89-113.
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Although widely used by international financial institutions, policy conditionality often fails in the sense that countries do not fully implement it. Up to now most research has focused on the design of conditionality. This paper, however, uses political economy analysis to address the issue of non-compliance. Either governments agree to conditions with little intention of carrying them through, or circumstances change the benefit-cost ratio of compliance. Analysis of these circumstances points to ways in which conditionality might usefully be reformed.
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The Financial Benefit of the IMF
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Author:
Bakker, Age F. P.; Schrijvers, Martijn A.
Book: Banca Nazionale del Lavoro Quarterly Review |
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Year:
2000 Vol: 53(214), pages 245-65.
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The IMF provides loans to countries in financial distress at a relatively low interest rate. In this article the authors calculate how much the seven largest debtors to the IMF have saved on interest payments during the Asian crisis and its aftermath. The authors explain how the IMF can charge these low interest rates and at what cost for creditor countries. The conditionality attached to the use of IMF resources in the form of policy measures reduces moral hazard behaviour; they argue that this is a better instrument than raising interest rates on IMF loans. |
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Incentive Mechanisms Surrounding International Financial Institutions
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Author:
Hamada, Koichi
Book: Asian Development Review |
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Year:
1998 Vol: 16(1), pages 126-48..
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This paper applies the common agency framework and the theory of nonprofit organization to the functioning of international financial institutions (IFIs) such as the IMF, IBRD, and ADB. Webs of intricate monitoring networks exist among member countries of an institution, its secretariat, and countries that receive financial support in exchange for conditionality. The paper will show, under the assumption of risk averse institutions and risk neutral members, that (i) the power of monitoring will be normally weakened if the IFI has an independent objective distinct from that of members; (ii) two or more IFIs will help the members unless external diseconomies exist among them; (iii) the free-rider problem of public goods can be resolved by conditionality but under a strict condition of perfect appropriability of surplus by principals, and (iv) if the IFI is situated between two risk neutral members like donor countries and recipient countries of IFI support, then the weakening of the power of monitoring disappears.
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El Salvador: Post-conflict reconstruction
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Author:
Eriksson, John; Kreimer, Alcira; Arnold, Margaret
Book: Operations Evaluation Department Country Case Study Series. Washington, D.C.: World Bank |
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Year:
2000 Vol: 2000, pages xiii, 89.
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Assesses the World Bank's experience in assisting postconflict reconstruction in El Salvador after peace accords in 1992 formally ended a twelve-year civil conflict and synthesizes the findings of a broader assessment of the World Bank's experience with postconflict reconstruction that focused on Bosnia and Herzegovina, El Salvador, and Uganda. Summarizes the lessons learned from postconflict reconstruction in the three country cases. Describes the evolution of the conflict in El Salvador. Discusses the Bank's role in El Salvador before and after the conflict. Assesses the Bank's role in aid coordination just before the signing of the peace accords and during the first few years of postconflict reconstruction; the Bank's role in stabilizing, reforming, and rebuilding the economy; and the Bank's role in rebuilding human and social capital. Addresses some special issues, including the timing and comparative advantages and disadvantages of Bank reengagement in El Salvador; the use of conditionality; the Bank's interaction with nongovernmental organizations, civil society, and the political opposition; and the staff and management of the country team. Draws lessons from the World Bank's experience in postconflict El Salvador. Bibliography; no index.
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What Diagnosis for Europe's Ailing Regions?
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Author:
Hurst, Christopher; Thisse, Jacques Francois; Vanhoudt, Patrick
Book: EIB Papers |
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Year:
2000 Vol: 5(1), pages 9-29.
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The paper starts with a brief overview of the reasons behind persistent regional dispersion. It then draws on several case studies to identify common features behind regional (non-)convergence, and looks at the suitability of various policy approaches. The paper focuses next on the rationale behind national and supra-national support. It is argued that, while at the national level the main aim of regional policies is to reduce the cost of labour market policies, the motivation behind EU transfers is less straightforward. Here, regional assistance should rather be seen in the context of side-payments between governments to reach agreement on other matters. In order to reduce the possibility of future payments--and thus, institutional sclerosis--these transfers should ideally be growth-inducing. Therefore, the paper provides a discussion of conditionality on the use of EU loans and grants, and concludes with a number of recommendations regarding the structure of public policy interventions.
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The Korean Financial Crisis: Diagnosis, Remedies and Prospects
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Author:
Kwon, O. Yul.
Book: Journal of the Asia Pacific Economy |
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Year:
1998 Vol: 3(3), pages 331-57.
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Pulling down the curtain on its economic miracle of the last three decades, South Korea suddenly fell into a financial crisis in 1997, and was rescued by the IMF. The causes of the crisis are identified in four different sectors of the Korean economy: the real sector, the banking sector, the securities market and the foreign exchange market. Underlying the numerous causes identified for the crisis is the failure of the very institutions and economic structure that propelled Korea to its economic success, in adapting to emerging changes in domestic and international environments. The IMF rescue package is therefore intended to remedy the institutional and structural flaws. The Korean economy is at a crossroads. If it complies well with the IMF conditionality, the economy will be revitalized based on a firmer institutional and structural foundation within a few years. If, however, Korea fails to do so, it will remain an IMF recidivist. Although it has made substantial progress, Korea still faces serious challenges for a successful completion of the IMF programme.
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Foreign Transfers and Tropical Deforestation: What Terms of Conditionality?
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Author:
Soest, Daan; Lensink, Robert
Book: American Journal of Agricultural Economics |
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Year:
2000 Vol: 82(2), pages 389-99.
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The international community considers the possibility of using aid as an instrument to improve natural resource conservation in developing countries. By making the amount of transfers dependent on the efforts of the recipient countries to improve conservation, appropriate incentives can be given. The authors propose a transfer function in which developing countries are linearly rewarded for having a positive stock of forest, and where the amount of donations is negatively related to the rate of deforestation. This transfer function enables the international community to improve long-term forest conservation as well as the rate of deforestation during the adjustment period.
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The New International Financial Architecture: Reconstruction, Renovation, or Minor Repair?
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Author:
Kenen, Peter B.
Book: International Journal of Finance and Economics |
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Year:
2000 Vol: 5(1), pages 1-14..
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The Finance Ministers of the G-7 countries appear to believe that they have completed their work on the new architecture of the international financial system. However, key issues have not been resolved. The official community must still decide if and when debt restructuring should replace large-scale official financing. It must still decide how to offset the effects of the asymmetry between the large size of global capital markets and the small financial sectors of emerging-market countries. It must still devise strong incentives for emerging-market countries to adopt the codes, reforms, and policies endorsed by the architecture exercise. It has not given serious, critical attention to the quality of International Monetary Fund (IMF) conditionality and the basic dilemma posed by open capital markets: must the restoration of investor confidence take priority over domestic stabilization and the mitigation of economic hardship in a crisis-stricken country?
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The Timing of Multilateral Lending
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Author:
Perraudin, William; Sibert, Anne
Book: Economic Journal |
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Year:
2000 Vol: 110(460), pages 192-211..
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Bargaining over the terms of multilateral lending can be a prolonged process. The authors model failure to come to quick agreement as a screening device. Policy makers who find conditionality especially costly delay to signal their type. This paper show that increased costs to not reaching agreement, whether borne by borrowers or lenders, can increase the chances of delay.
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Institutions for Macroeconomic Stability in Africa
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Author:
Azam, Jean Paul
Book: Journal of African Economies |
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Year:
1999 Vol: 8(0), Supplement 1 December 1999, pages 6-29.
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Before discussing the type of institutions that can be designed for overcoming the credibility problem raised by monetary policy, this paper defines macroeconomic instability, showing that inflation is a crucial factor. The relationships between inflation and macroeconomic instability are analysed using a small Australian-type model, with rational expectations, where a too-high rate of inflation entails a continuum of equilibria, regarded as the root of macroeconomic instability. The credibility issue is then discussed in a simple optimal seignorage framework. Different institutional solutions, ranging from currency board to IMF conditionality, are discussed.
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When Is Foreign Aid Policy Credible? Aid Dependence and Conditionality
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Author:
Svensson, Jakob
Book: Journal of Development Economics |
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Year:
2000 Vol: 61(1), pages 61-84..
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Disbursements of foreign aid are guided (in part) by the needs of the poor. Anticipating this, recipients have little incentive to improve the welfare of the poor. In principle, conditionality could partly solve the problem, but this requires a strong commitment ability by the donor. Without such a commitment technology, aid will be allocated (partly) to those in most need, and the recipient governments will exert low effort in alleviating poverty. Contrary to conventional wisdom in the aid literature, the authors show that tied project aid and delegation of part of the aid budget to an (international) agency with less aversion to poverty improve welfare of the poor in the recipient countries.
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Positioning the World Bank
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Author:
Gilbert, Christopher; Powell, Andrew; Vines, David
Book: Economic Journal |
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Year:
1999 Vol: 109(459), pages F598-633.
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This article examines the rationale for the World Bank and explores whether its objective is best served by its current mix of activities. The authors are critical of the Bank's reliance on conditionality, and advocate evolution into a Knowledge Bank, which would lend with few conditions to countries with good policies and good institutions, and would concentrate on the provision of knowledge and technical assistance, rather than lending, in countries where the policy framework is poor. The authors also advocate an expansion in the Bank's role as a provider of global public goods; they critically examine the Banks role in relation to financial crises. |
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Aid, Taxation and Development in Sub-Saharan Africa
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Author:
Adam, Christopher S.; O'Connell, Stephen A.
Book: Economics and Politics |
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Year:
1999 Vol: 11(3), pages 225-53.
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External aid donors have gradually shifted from a benign view of the African state to one that presumes a conflict of interest between the state and its own private sector. What are the implications of this diagnosis for the design of aid programs? The authors develop a model that locates slow growth in the overly narrow interests of a political elite. They study the impact of aid on policy choice and private investment and the role of conditionality in securing the gains from aid. The results capture key features of the current diagnosis while underscoring the need for more sophisticated treatments of domestic political institutions, institutional change, and donor motivations.
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Aid Works--Let's Prove It!
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Author:
Herfkens, Eveline
Book: Journal of African Economies |
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Year:
1999 Vol: 8(4), pages 481-86.
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Now that strong international consensus has been reached on how to combat poverty, it is argued that words must be put into deeds. To improve effectiveness of aid, the Netherlands has decided to focus its programme on countries that perform well in terms of good policy and good governance. By doing this, the old style conditionality debate can be avoided. Donors' attitude towards recipients should become based on partnership, so that the recipient government can be in control. Reforms are needed both in making donor programmes more coherent and focused on development, and in making recipients' public expenditures better coordinated and managed.
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Clean-Ups, Conditionality and Adjustment: Why Institutions Matter in Mozambique
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Author:
Harrison, Graham
Book: Review of African Political Economy |
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Year:
1999 Vol: 26(81), pages 323-33.
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This article critically evaluates the nature of administrative reform in the context of conditionality and structural adjustment. Structural adjustment programs constitute the broader environment and prioritizations within which donors and creditors support institutional reform. This raises the questions concerning the ownership and purpose of reform, especially if one bears in mind the substantial inequality of power between individual severely-indebted states and multilateral creditors which enjoy the alignment of many bilateral donors behind their prognoses. One can identify some of the contradictions that this relationship produces through an examination of Mozambique's experience with donors in respect to corruption and anti-corruption strategies. Here, corruption constitutes part of the politics of adjustment, and the reforms which are to tackle it have to work on an institutional terrain which has already been subjected to the disintegrative effects of a decade of adjustment and minimally-controlled donor influence. All of this renders the idea--often at the base of much donor thinking concerning reform--of a stable and enlightened leadership motivated to implement rational/technical reform throughout government at best a simplification and at worst a misrepresentation.
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Aid and the political economy of policy change
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Author:
Killick, Tony
Book: With Ramani Gunatilaka and Ana Marr. |
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Year:
1998 Vol: London and New York: Routledge, 1998,pages xiv, 221..
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Considers the efficacy and limitations of conditionality as a means for international financial institutions to influence policy processes in countries receiving loans and explores whether there might be constructive alternatives to conditionality. Surveys existing multicountry, cross-section studies of the adjustment programs of the IMF and the World Bank to learn about the effectiveness of conditionality. Studies the adjustment experiences of Southeast Asia and Latin America in more detail, examining the role played by conditionality in these experiences. Considers weak government "ownership" of programs as an explanation for the failures of policy conditionality. Frames conditionality as an agency problem and confronts hypotheses derived from this analytical framework with evidence from World Bank experiences with twenty-one countries, focusing on the extent of interest conflicts between donors and loan recipients. Examines the adequacy of the incentives, both rewards and punishments, offered by donors for the implementation of their policy conditions. Discusses alternative approaches that aid agencies might use to bring about sustained improvements in policy in loan-recipient countries. Killick is Senior Research Fellow of the Overseas Development Institute, London. |
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Towards a More Effective Conditionality: An Operational Framework
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Author:
Leandro, Jose E.; Schafer, Hartwig; Frontini, Gaspar
Book: World Development |
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Year:
1999 Vol: 27(2), pages 285-99..
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The "inducement" function of conditionality has failed. Its intrusive, shortsighted and ineffective character is now increasingly criticized, and may have contributed, at least in part, to the poor growth performance associated with adjustment programs in sub-Saharan Africa. This article proposes a new approach to conditionality attached to adjustment programs. It is built around three main features: recipient ownership of the appropriate reform program, considered to be a key factor for success; a more long-term approach to economic reform, avoiding in particular the disruptive practice of stop-go disbursements, and enhanced donor coordination as a factor for greater aid efficiency. Its implementation should lead to greater aid selectivity in favor of reforming countries, increased responsibility for aid recipients to decide on the rhythm and sequencing of reforms, and smoother aid flows with less disruptive aid suspensions.
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References related to Debt
(0 references
are shown.)
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References related to International Monetary Fund
(7 references
are shown.)
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European Currency Crises and After
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Author:
Christian Bordes-Marcilloux (Editor), Eric Girardin (Editor), Jacques Melitz (Editor), Christian Bordes (Editor)
Book: European Currency Crises and After
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Year:
May 1995 Vol: 253 pages |
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Responding to questions raised by the speculative crises of 1992-93, which shook the European Monetary System (EMS) during Europe's worst postwar recession, 11 contributed chapters examine recent theoretical models of exchange rate target zones, exchange rate crises, and central bank credibility. They also examine the empirical evidence of misalignment, the efficiency of central bank intervention by the G3, measures of exchange rate risk under wide official bands, the exchange rate crises in 1992-93, and central bank behavior in the EMS. For students and teachers of international finance, international monetary economics, and monetary policy. |
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It can be ordered via Amazon: http://halljobs.com/finance/359.shtml |
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What Drives Consumption Booms?
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Author:
Montiel, Peter J.
Book: World-Bank-Economic-Review |
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Year:
2000 Vol: 14(3), pages 457-80. |
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Consumption booms have been common in both industrial and developing countries, and several explanations have been offered for their occurrence. These include economy-wide wealth effects associated with favorable movements in the terms of trade or euphoric expectations triggered by macroeconomic reforms, Ricardian effects associated with fiscal stabilization, lending booms following financial liberalization, and a variety of distortions in intertemporal relative prices. Using a large cross-country sample of booms, this article assesses how widely applicable these explanations are. The key finding is that wealth effects linked to favorable movements in the terms of trade and anticipated improvements in macroeconomic performance seem to have been more important empirically than explanations relying primarily oil fiscal phenomena or distortions in intertemporal relative prices.
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Globalization and the Challenge for Developing Countries
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Author:
Shahid Yusuf
Book: World Bank
DECRG |
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Year:
June 2001 |
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The paper argues that there are several key and interrelated elements to
globalization and that the future gains will derive from the degree to which countries are willing to embrace them together rather than in a sequenced fashion. Moreover, the future course of globalization is by no means assured in spite of the added momentum imparted by the gains in communications technology and the spread of the Internet. The
degree to which countries have moved toward globalization varies widely. In both the industrialized and the developing countries skeptics question the benefits, and there is considerable resistance to further integration, resistance which stiffened following the
east Asia crisis of 1997-98.
This paper will concentrate mainly on the five interlinked aspects of globalization which present opportunities for developing countries
– and discusses appropriate policy actions. |
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This paper can be downloadable at: http://econ.worldbank.org/files/2210_wps2618.pdf |
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Untitled Document
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Capital Flows to Emerging Markets: Liberalization, Overshooting and Volatility
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Author:
Bacchetta,Philippe; Van Wincoop,Eric
Book: National Bureau of Economic Research Working Paper |
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Year:
1998 Vol: 6530, pages 26.
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The paper analyzes the impact of financial liberalization and reforms in emerging markets on the dynamics of capital flows to these markets, using a simple model of international investors' behavior. We first show that the gradual nature of liberalizations, combined with the cost of absorbing large inflows in emerging economies, leads to rich dynamics of capital flows and often implies an initial period of overshooting as portfolios adjust. Asset prices will overshoot as well. Second, we show that if investors have incomplete information about new emerging markets, and learn over time, there can be high volatility of capital flows as well as contagion. Finally, we provide numerical estimates of long run capital inflows to emerging market economies and compare them to actual inflows. This gives a good indicator of upcoming crisis situations.
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Untitled Document
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Does Financial Reform Raise or Reduce Saving?
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Author:
Bandiera,Oriana, et al.
Book: Review-of-Economics-and-Statistics |
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Year:
2000 Vol: 82(2),pages 239-63. |
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The effect of financial liberalization on private saving is theoretically ambiguous, not only because the link between interest rate levels and saving is itself ambiguous, but also because financial liberalization is a multidimensional and phased process, sometimes involving reversals. Using principal components, the paper construct 25-year time-series indices of financial liberalization for each of eight developing countries: Chile, Ghana, Indonesia, Korea, Malaysia, Mexico, Turkey, and Zimbabwe. These are employed in an econometric analysis of private saving in these countries. Our results cannot offer support for the hypothesis that financial liberalization will increase saving. On the contrary, the indications are that liberalization overall--and in particular those elements that relax liquidity constraints--may be associated with a fall in saving.
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Untitled Document
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IMF Conditionality and Objections: The Russian Case
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Author:
Martinez Vazquez, Jorge, et al..
Book: American Journal of Economics and Sociology |
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Year:
2001 Vol: 60(2), pages 501-17.
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Emerging economies in crisis typically request assistance from the International Monetary Fund (IMF). After evaluating the situation, the IMF makes a loan available to the country, conditional on certain policy reforms. Governments usually resist many of these measures and negotiation ensues. This paper analyzes the most contentious measures of IMF conditionality in the context of Russia after the August 1998 crisis. The most discussed measures include the budget deficit, structural reforms, and exchange rate policy. Our analysis suggests that to some extent the disagreement arose because the IMF is focused on changing steady states somewhat ignoring the transition path, while the Russian government is preoccupied with transitional dynamics without a clearly defined steady state concept.
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Untitled Document
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The Financial Benefit of the IMF
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Author:
Bakker, Age F. P.; Schrijvers, Martijn A.
Book: Banca Nazionale del Lavoro Quarterly Review |
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Year:
2000 Vol: 53(214), pages 245-65.
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The IMF provides loans to countries in financial distress at a relatively low interest rate. In this article the authors calculate how much the seven largest debtors to the IMF have saved on interest payments during the Asian crisis and its aftermath. The authors explain how the IMF can charge these low interest rates and at what cost for creditor countries. The conditionality attached to the use of IMF resources in the form of policy measures reduces moral hazard behaviour; they argue that this is a better instrument than raising interest rates on IMF loans. |
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