Sudden Stops and Imf-Supported Programs
University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Delhi School of Economics
International Monetary Fund (IMF) - Research Department
NBER Working Paper No. w12235
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.
Number of Pages in PDF File: 53working papers series
Date posted: May 25, 2006
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