Is Transparency Good for You, and Can the IMF Help?

47 Pages Posted: 30 Jan 2006

See all articles by Rachel Glennerster

Rachel Glennerster

Massachusetts Institute of Technology (MIT) - Department of Economics

Yongseok Shin

Washington University in St. Louis - Department of Economics; National Bureau of Economic Research (NBER); Federal Reserve Banks - Federal Reserve Bank of St. Louis

Date Written: June 2003

Abstract

This paper finds that reforms introduced by the IMF to promote transparency have created more informed markets and reduced borrowing costs for those emerging market countries that volunteered for them. Using a quarterly panel estimation with fixed country effects, we find that sovereign spreads fall following the adoption of three different transparency reforms. The effects are economically important, especially for those countries with low initial transparency. We use two-stage least squares to address any endogeneity in the timing of reforms exploiting internal IMF timetables that are unrelated to country events. Next, using a panel GARCH specification, we show that spreads move more than normal in the days immediately following publication of IMF country documents.

Keywords: Transparency, publication, institutions, emerging markets, sovereign spreads, IMF, SDDS, ROSC, Article IV, GARCH, news effect, role of the IMF, credit ratings, borrowing costs, capital markets, data dissemination, market information

JEL Classification: F33

Suggested Citation

Glennerster, Rachel and Shin, Yongseok, Is Transparency Good for You, and Can the IMF Help? (June 2003). IMF Working Paper, Vol. , pp. 1-41, 2003. Available at SSRN: https://ssrn.com/abstract=879208

Rachel Glennerster (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

E53-320
77 Massachusetts Avenue
Cambridge, MA 02139
United States

Yongseok Shin

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

P.O. Box 442
St. Louis, MO 63166-0442
United States

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