The IMF and the Liberalization of Capital Flows

Review of International Economics, Vol. 16, No. 3, August 2008

35 Pages Posted: 27 Oct 2005 Last revised: 14 Jun 2018

See all articles by Joseph P. Joyce

Joseph P. Joyce

Wellesley College - Department of Economics

Ilan Noy

Victoria University of Wellington

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2005

Abstract

We evaluate the claim that the International Monetary Fund precipitated financial crises during the 1990s by pressuring countries to liberalize their capital accounts prematurely. Using data from a panel of developing economies from the 1982-1998 period, we examine whether the changes in the regime governing capital flows took place during participation in IMF programs. We find evidence that IMF program participation is correlated with capital account liberalization episodes during the 1990s. We use alternative indicators of capital account openness to test the robustness of our results. To determine whether decontrol was premature, we compare the economic and financial characteristics of countries that decontrolled during IMF programs with those of countries who did so independently.

Keywords: IMF programs, capital account liberalization

JEL Classification: F3

Suggested Citation

Joyce, Joseph P. and Noy, Ilan, The IMF and the Liberalization of Capital Flows (June 1, 2005). Review of International Economics, Vol. 16, No. 3, August 2008, Available at SSRN: https://ssrn.com/abstract=825652 or http://dx.doi.org/10.2139/ssrn.825652

Joseph P. Joyce (Contact Author)

Wellesley College - Department of Economics ( email )

106 Central Street
Wellesley, MA 02181
United States
781-283-2160 (Phone)
781-283-2177 (Fax)

Ilan Noy

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

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