IMF conditionalities, liquidity provision, and incentives for fiscal adjustment

@article{Guimaraes2013IMFCL,
  title={IMF conditionalities, liquidity provision, and incentives for fiscal adjustment},
  author={Bernardo Guimaraes and O. Iazdi},
  journal={International Tax and Public Finance},
  year={2013},
  volume={22},
  pages={705-722}
}
This paper proposes a model to study how conditional lending and immediate liquidity provision affect incentives for fiscal adjustment in a country facing the risk of sovereign default. Conditional lending provides explicit incentives for fiscal adjustment but immediate liquidity provision is more effective in reducing liquidation costs. For some parameters, immediate liquidity provision induces fiscal adjustment and debt repayment, while conditional lending does not (and vice-versa… Expand
View on Springer
anpec.org.br
2 Citations

Figures from this paper

2 Citations

Citation Type

Citation Type

The determinants of IMF fiscal conditionalities: economics or politics?
Conditionalites, measures that a borrowing country should adopt to obtain loans from the International Monetary Fund (IMF), are pervasive in IMF programs. This paper estimates the effects of… Expand
Recent Reforms of RBI towards NPA Management in Corporate Banking – An Empirical Study
This paper attempts to identify the determinants of NPAs across Indian Financial Sector prior to their turning into bad loans. Most academicians have examined NPA determinants, and these determinants… Expand

References

SHOWING 1-10 OF 40 REFERENCES
Sovereign default risk and commitment for fiscal adjustment
This paper studies fiscal policy in a model of sovereign debt and default. A time inconsistency problem arises: since the price of past debt cannot be affected by current fiscal policy and… Expand
Fiscal Policy and Default Risk in Emerging Markets
Emerging market economies typically exhibit a procyclical fiscal policy: public expenditures rise (fall) in economic expansions (recessions), whereas tax rates rise (fall) in bad (good) times.… Expand
Sovereign debt, structural adjustment, and conditionality
Abstract The lack of a proper enforcement mechanism for sovereign debt generates a commitment failure. As a result, a sovereign may seek to improve its position in debt renegotiations and thus evade… Expand
International Lending of Last Resort and Moral Hazard: A Model of Imf&Apos;S Catalytic Finance
It is often argued that the provision of liquidity by the international institutions such as the IMF to countries experiencing balance of payment problems can have catalytic effects on the behavior… Expand
The Economics and Law of Sovereign Debt and Default
This paper surveys the recent literature on sovereign debt and relates it to the evolution of the legal principles underlying the sovereign debt market and the experience of the most recent debt… Expand
Capital Flows and Capital-Market Crises: The Simple Economics of Sudden Stops
The paper studies mechanisms through which a sudden stop in international credit flows may bring about financial and balance of payments crises. It is shown that these crises can occur even though… Expand
One Reason Countries Pay Their Debts: Renegotiation and International Trade
This paper estimates the effect of sovereign debt renegotiation on international trade. Sovereign default may be associated with a subsequent decline in international trade either because creditors… Expand
One Reason Countries Pay Their Debts: Renegotiation and International Trade
This paper estimates the effect of sovereign debt renegotiation on international trade. Sovereign default may be associated with a subsequent decline in international trade either because creditors… Expand
Is it punishment? Sovereign defaults and the decline in trade
Sovereign defaults are associated with declines in defaulting countries trade. Are these declines the result of trade sanctions as the trade sanctions argument of sovereign borrowing would suggest?… Expand
Sovereign defaulters: Do international capital markets punish them?
We empirically study whether countries that default on their debt experience a reduction in their capital inflows, as suggested by the literature. Our data contain information on (i) the defaulter… Expand
...
1
2
3
4
...