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Patrick A. Imam
We analyze the effect of IMF programs on economic agents' expectations about the economy in transitional countries using survey data from the Central and Eastern Eurobarometer poll, an annual general public survey monitoring the evolution of public opinion from 1990 to 1997. Previous studies, in contrast, have looked at indirect measures, such as capital flows or yield spreads, to assess the impact of IMF programs on economic expectations. Using a multinomial probit model, we find that IMF loans appear to have a strong effect on agent expectations in the early years, through the inflow of real money, and through the signaling effect. IMF programs during periods of collapsing growth appear to reinforce underlying expectations for the future; they are associated with positive expectations for those with an optimistic outlook and negative expectations for those with a negative outlook. Once recovery is underway, and economic uncertainty diminishes, it appears that IMF programs cease to have a statistically significant effect on the expectations of economic agents. This suggests that IMF programs have the biggest impact on expectations during periods of great uncertainty and less of an impact when countries are subject to minor shocks.
Patrick A. Imam

.157) -0.453 -1.306 (***) (0.165) -0.450 CIS -0.545 (***) (0.070) -0.166 -0.552 (***) (0.071) -0.168 IMF Program IMF Dummy 0.146 (***) (0.021) 0.050 IMF Inflow/GDP 0.076 (***) (0.012) 0.026 IMF Serial Program -0.133 (***) (0.021) -0.047 0.091 (***) (0.017) 0.032 Constant 0.051 (1.265) 0.065 (1.272) No of Observations 79,805 79,805 Pseudo R 2 0.038 0.039 Notes: Dependent Variable: Expecation of the change in the

Mr. Jacques A Miniane

on enforceability, how should it be weighted in the index? As a result of the lack of a reliable index of capital controls, many studies trying to assess the ability of capital controls to affect financial flows have followed a case-study approach. 1 Papers that have attempted to study the effects of capital controls cross-sectionally, such as Grilli and Milesi-Ferretti (1995 ), have commonly relied on the 0/1 IMF dummies. The pre-1996 editions of IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) provide dummies for all member

Mr. Martin Schindler

Mody-Murshid and Chinn-Ito measures provide more finely graded information than the simple IMF dummy, it is less clear to what extent these indicators are measures of capital account openness in a narrow sense, given that three of the four indices underlying these indicators represent information that is not directly related to capital account transactions. 14 By contrast, some authors have chosen a narrow approach. For example, Bekaert, Harvey, and Lundblad (2005) focus on only equity controls and attempt to date equity liberalization episodes for a sample of 42

Mr. Atish R. Ghosh, Mr. Juan Zalduendo, Mr. Alun H. Thomas, Mr. Jun I Kim, Ms. Uma Ramakrishnan, and Mr. Bikas Joshi

variables Fiscal balance change 7 −0.08** −0.03 −0.03 0.23** Fiscal balance interactive with IMF dummy 8 −0.45** Interest rate change (real terms) 9 −0.08** −0.07* −0.07* −0.03 Interest rate interactive with IMF dummy 10 −0.07 Exogenous factors Terms of trade −0.01 0.02 0.02 −0.00 Other Size of the economy 11 0.77*** 0.87*** 0.88*** 0.93*** Latin American dummy −0.69 −1.49 −1.51 −1.98 Asian dummy 2.41 2.45 2.34 2

Mr. Benedict J. Clements, Mr. Sanjeev Gupta, Mr. Emanuele Baldacci, and Mr. Carlos Mulas-Granados
This paper investigates the political and economic determinants of successful fiscal adjustment in 25 emerging market economies from 1980 to 2001. The results show that large and back-loaded fiscal adjustments have the highest likelihood of success. Fiscal consolidations based on expenditure cuts increase the probability of approaching and achieving fiscal sustainability but are insufficient to maintain it unless accompanied by revenue reforms. Adjustment episodes launched in countries where governments enjoy a parliamentary majority and do not face imminent elections, are found to be more successful. Fiscal consolidations undertaken under IMF-supported programs also have a higher probability of success.