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Abstract:
Agreements on reforms of corporate governance, corporate law, and securities regulations, in order to augment the functioning of emerging equity markets, are complicated due to the fact that two different financial systems with some opposing features have evolved in the advanced economies, namely the insider system and the outsider system. The persistence of these systems are sought to be explained by introducing interactions between corporate governance, regulatory intervention, and capital markets into a model of evolutionary game theory. Resulting network effects are identified and analyzed. One major conclusion of the analysis is that, in the long run, reforms should be headed towards features of the outsider system because it operates better in integrated capital markets. However, attempts to achieve immediate transition into that direction can have detrimental effects, if the legal environment is not supportive enough for arm's-length financing.

corporate governance, corporate ownership, network effects, path dependence, corporate law, securities regulation

Abstract:
This paper proposes and applies an analytical framework to assess vulnerabilities of emerging and developing economies to the global financial and economic crisis. The analytical framework identifies six different channels of vulnerability to the global financial and economic crisis and estimates associated risks for each country. The six risk dimensions are direct liquidity risks, risks of a reversal of volatile monetary flows, export slump risks, inadequate reserves risk, fiscal risks, and risks of a crisis in the domestic financial sector. It finds that many countries in sub-Saharan Africa face an elevated risk of a domestic financial crisis following the global slow-down. Monetary flow reversal risks are found to be high in the Caribbean region. The main risk for the Pacific region is considered to stem from its dependence on exports. Fiscal and financial sector weaknesses are the most prominent risks identified in many Latin American countries as well in the EU’s eastern neighbours. The average risk profiles of the Asian and Mediterranean regions are considered to be relatively low, albeit with numerous individual country exceptions.

financial crises, emerging and developing economies, early warning systems

Abstract:
This note was produced as background to the IEO evaluation of the IMF and Aid to Sub-Saharan Africa. It sets out the technical analysis underpinning the evaluation's estimate for spending and absorption ratios and elaborates further on its scope, rationale and limitations. It also presents more detailed results regarding the treatment of aid increases in country programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF) between 1999 and 2005 (including those outside Africa).

These results show that, in cases where international reserves were high and inflation was low, PRGF program design implicitly followed an immediate 'spend and absorb' approach for aid increases. In cases where reserves were low, at least some of the increases in aid were programmed to be used to boost these reserves instead of financing additional net imports. In cases where the authorities faced domestic financing problems (proxied by high inflation), they programmed some aid increases to pay down domestic debt instead of financing additional net expenditures.

IMF, PRGF, program design, foreign aid, inflation, international reserves

Abstract:
This paper studies the spending and absorption of aid in PRGF-supported programs, verifies whether the use aid is programmed to be smoothed over time, and analyzes how considerations about macroeconomic stability influence the programmed use of aid. It finds that PRGF-supported programs allow countries to use most or almost all increases in aid within a few years. The paper finds some evidence that the programmed absorption of aid is higher in countries where reserve coverage is above a certain threshold, whereas programmed spending does not seem to depend on inflation. Finally, it shows that the presence of a PRGF-supported program does not constrain the actual spending and absorption of aid.

Absorptive capacity, Development assistance, Poverty Reduction and Growth Facility, Financial stability, Inflation, Developing countries, Economic models