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How can the IMF catalyse private capital flows? A model

Adrian Penalver

How can the IMF catalyse private capital flows? A model

by Adrian Penalver

  • 373 Want to read
  • 15 Currently reading

Published by Bank of England in London .
Written in English

    Subjects:
  • International Monetary Fund.,
  • Loans, Foreign -- Econometric models.

  • Edition Notes

    Statementby Adrian Penalver.
    SeriesWorking paper,, no. 215, Working paper (Bank of England : Online) ;, no.215.
    ContributionsBank of England.
    Classifications
    LC ClassificationsHG186.G7
    The Physical Object
    FormatElectronic resource
    ID Numbers
    Open LibraryOL3477618M
    LC Control Number2005617349

    The aim of this section is to assess the relative contribution of different types of financial flows to the probability of a takeoff. Variable definition and sources are summarized in Table A1. We obtain data on portfolio debt flows, portfolio equity flows, and FDI flows from the IMF International Financial Statistics (IFS) database. We also. The IMF suggested that Government allows for joint partnerships for the funding of growth-enhancing investments into the sector, a move which it believes could catalyse resources from the private.

    The Caucasus and Central Asia (CCA) region was hit hard by COVID, with energy exporters also enduring the oil price collapse. Exchange rate flexibility, support from the IMF, and low risk of sovereign debt distress will help most CCA countries remain stable through absent further outbreaks. Using empirical analysis, complemented with case studies, this paper studies under which circumstances IMF programs manage to catalyze private capital flows into the countries concerned. While we found no catalysis in general, the situation differs very much depending on the type of capital flow and the program¿s objective.

      The high level of gross flows into emerging markets and the "downhill" flow of private capital to some extent temper this interpretation. The three sets of explanations I have just discussed are only some of the many stories that have been offered to explain the uphill flow of capital, and none of them have gained wide acceptance as the best. A selection model for 68 countries between and is used to test the impact of International Monetary Fund(IMF) programs on international capital markets and examine how agreements are perceived by multinational investors.


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How can the IMF catalyse private capital flows? A model by Adrian Penalver Download PDF EPUB FB2

This paper presents a model to explain how IMF programmes can catalyse private capital flows following a financial crisis, a concept that was at the heart of the IMF’s strategy for dealing with capital account crises in the late s. In the model, the IMF lends funds below the prevailing. This paper presents a model to explain how IMF programmes can catalyse private capital flows following a financial crisis, a concept that was at the heart of the IMF's strategy for dealing with.

This paper presents a model to explain how IMF programmes can catalyse private capital flows following a financial crisis, a concept that was at the heart of the IMF’s strategy for dealing with capital account crises in the late s. Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.

Within the model, although IMF assistance is able to catalyze private flows, this provides incentives for government to issue larger amounts of short-term debt, making the roll-over problem larger. a commonly held view that the IMF helps attract private capital to a country by endorsing the country’s economic reform plan.

They cite, for example, a UK Treasury Committee report on the IMF that refers to an all pervasive conventional wisdom that an IMF programme buys a Good Housekeeping Seal of Approval.

The surge in private capital flows to developing countries during the s has largely bypassed sub-Saharan Africa. In sharp contrast to the earlier lending boom of –82, when sub-Saharan Africa accounted for percent of total private flows to developing countries, the region accounted for only percent of such flows during the period – A curated repository of International Monetary Fund (IMF) working papers, books, feature articles and other publications, as well as datasets, related to capital flows.

A large downhill flow of capital seems unlikely to persist in the near term. For one thing, net private inflows to developing countries have turned negative recently.

True, stronger growth and infrastructure needs in these economies, as well as structural changes like aging populations in richer ones, could push capital in the “right.

capital flows during both –07 and the –08 financial crisis, but domestic factors have dominated in the recovery period since. Again, Bacchetta and van Wincoop () and Gourio et al. () find strong evidence that global shocks are transmitted to financial markets and capital flows. At the same time, capital flows have contributed to excessive credit expansions and systemic risk in several cases.

Moreover, when capital flows reverse, it can lead to heightened macroeconomic volatility and can adversely affect financial stability. The. Research work by the IMF's staff on the effectiveness of the country programs the organization supports, which has long been carried out, has intensified in recent years.

IMF analysts have sought to 'open up the black box' by more closely examining program design and implementation, as well as how these influence programs' effectiveness. Their efforts have also focused on identifying the. Catalytic IMF.

A Gross Flows Approach Aitor Erce and Daniel Riera-Crichton Abstract The financial assistance provided by the International Monetary Fund is assumed to act as a catalyst for fresh investment. By reassuring private agents, official lending should facilitate access to international capital.

Abstract The IMF attempts to stabilize private capital flows to emerging markets by providing public monitoring and emergency finance. In analyzing its role we contrast cases where banks and bondholders do the lending. Banks have a natural advantage in monitoring and creditor coordination, while bonds have superior risk sharing characteristics.

Our story in a nutshell Catalysis is not to be found on foreign creditors. IMF loans do not ease the foreign flow. Catalysis is very significant vis-à-vis residents • Reduces fresh outflows • Induces retrenchment While IMF catalysis is found on portfolio flows, the domestic banks story seems to be the “big story” Domestic catalysis is stronger during debt crises and foreign catalysis.

Adrian Penalver, "How can the IMF catalyse private capital flows. A model," Bank of England working papersBank of England. Walter B. Wriston, "Dumb Networks and Smart Capital," Cato Journal, Cato Journal, Cato Institute, vol. 17(3), Winter. Jun I Kim, The nature of private capital flows has changed in the s, with foreign direct investment (FDI) and foreign private investment (FPI) playing a more important role than syndicated bank lending.

Widespread removal of barriers to foreign investment, falling transportation and communication costs have allowed trans-national corporations (TNCs. The IIF Capital Flows Tracker includes all of our current portfolio flows data (previously included in our Portfolio Flows Tracker) as well as the broader net capital flow estimates.

It is released near the end of each month, and both data sets (portfolio flows and net capital flows) are available for download below. Private flows are defined as financial flows at market terms financed out of private sector resources (changes in holdings of private, long-term assets held by residents of the reporting country) and private grants (grants by non-government organisations, net of subsidies received from the official sector).

The IMF in a World of Private Capital Markets Barry Eichengreen, Kenneth Kletzer, and Ashoka Mody1 Revised, Febru Abstract The IMF attempts to stabilize private capital flows to emerging markets by providing public monitoring and emergency finance. In analyzing its role we contrast cases where banks and bondholders do the lending.

Gross capital inflows to the Middle East and North Africa (MENA) have remained high compared to other emerging markets, but their composition has changed significantly, with a surge in portfolio flows (equity and bond instruments) and a decline in foreign direct investment.

This paper examines the claim that IMF agreements catalyze other private capital flows. We identify a series of propositions from the literature which we test using a treatment effects model to examine how private capital flows into middle-income countries respond to IMF agreements.1.

Advising on capital flows. This Issues Paper discusses the motivation, scope and themes of an IEO evaluation of IMF advice on international capital flows.

With increasing international integration of financial markets, advice on how to garner the benefits of capital flows while.The financial assistance the International Monetary Fund provides is expected to catalyze private capital flows.

Such a catalytic effect has, however, proven empirically elusive. This paper deviates from the standard approach based on the net capital inflow to study instead the Fund’s catalytic role in the context of gross capital flows.