IMF-supported programs and crisis prevention : an analytical framework /

IMF-supported programs and crisis prevention : an analytical framework /

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Bibliographic Details
Author / Creator:	Kim, Jun (Jun Il), author.
Imprint:	[Washington, D.C.] : International Monetary Fund, Policy Review and Development Dept., ©2006.
Description:	1 online resource (37 pages) : illustrations
Language:	English
Series:	IMF working paper, 2227-8885 ; WP/06/156 IMF working paper ; WP/06/156.
Subject:	International Monetary Fund -- Econometric models. International Monetary Fund. Economic assistance -- Econometric models. Economic policy -- Econometric models. Financial crises -- Prevention -- Econometric models. Econometric models. Economic assistance -- Econometric models. Economic policy -- Econometric models.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12498536

Hidden Bibliographic Details
Other authors / contributors:	International Monetary Fund. Policy Development and Review Department.
ISBN:	1283517655 9781283517652 9781451983128 1451983123 1462389155 9781462389155 1452704732 9781452704739 9786613830104 6613830100
Digital file characteristics:	data file
Notes:	Includes bibliographical references. Restrictions unspecified Electronic reproduction. [Place of publication not identified] : HathiTrust Digital Library, 2010. Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 English. digitized 2010 HathiTrust Digital Library committed to preserve Print version record.
Summary:	This paper presents an analytical framework for considering the role of IMF-supported programs in preventing crises, particularly capital account crises. The model builds upon the global games framework to establish a unique relationship between the crisis probability and the parameters of the program, which is assumed to be negotiated between the IMF and the member country, taking explicit account of each party's interests. In the model, from the perspective of the borrowing country, IMF financing and policy adjustment are (perfect) substitutes inasmuch as they both contribute to the country's liquidity and thus reduce the likelihood of a crisis. In equilibrium, however, IMF financing promotes stronger policies, implying that financing and adjustment are strong complements in crisis prevention. Conditionality plays a crucial role in sustaining the program, providing mutual assurances-to the member country that, if it undertakes the agreed policies, financing will indeed be forthcoming, and to the IMF that the country will implement the agreed policies as the IMF disburses its resources. The model helps explain how liquidity crises may come about, how IMF support can reduce the likelihood of a crisis by providing liquidity and sustaining stronger policies, and why the observed mix between financing and adjustment may vary across programs.
Other form:	Print version: Kim, Jun (Jun Il). IMF-supported programs and crisis prevention. [Washington, D.C.] : International Monetary Fund, Policy Review and Development Dept., ©2006
Standard no.:	10.5089/9781451983128.001

Description
Summary:	This paper presents an analytical framework for considering the role of IMF-supported programs in preventing crises, particularly capital account crises. The model builds upon the global games framework to establish a unique relationship between the crisis probability and the parameters of the program, which is assumed to be negotiated between the IMF and the member country, taking explicit account of each party's interests. In the model, from the perspective of the borrowing country, IMF financing and policy adjustment are (perfect) substitutes inasmuch as they both contribute to the country's liquidity and thus reduce the likelihood of a crisis. In equilibrium, however, IMF financing promotes stronger policies, implying that financing and adjustment are strong complements in crisis prevention. Conditionality plays a crucial role in sustaining the program, providing mutual assurances-to the member country that, if it undertakes the agreed policies, financing will indeed be forthcoming, and to the IMF that the country will implement the agreed policies as the IMF disburses its resources. The model helps explain how liquidity crises may come about, how IMF support can reduce the likelihood of a crisis by providing liquidity and sustaining stronger policies, and why the observed mix between financing and adjustment may vary across programs.
Physical Description:	1 online resource (37 pages) : illustrations
Format:	Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002.
Bibliography:	Includes bibliographical references.
ISBN:	1283517655 9781283517652 9781451983128 1451983123 1462389155 9781462389155 1452704732 9781452704739 9786613830104 6613830100
ISSN:	2227-8885 ;