Keeping Capital Flowing: The Role of the IMF
35 Pages Posted: 9 Feb 2006
Date Written: October 2004
In this paper, we examine the IMF`s role in maintaining the access of emerging market economies to international capital markets. We find evidence that both macroeconomic aggregates and capital flows improve following the adoption of an IMF-supported program, although they may initially deteriorate somewhat. Consistent with theoretical predictions and earlier empirical findings, we find that IMF-supported programs are most successful in improving capital flows to countries with bad, but not very bad fundamentals. In such countries, IMF-supported programs are also associated with improvements in the fundamentals themselves.
Keywords: International Monetary Fund, capital flows, catalytic finance, emerging markets
JEL Classification: F21, F33
Suggested Citation: Suggested Citation