This paper analyzes the initial economic conditions before IMF financial arrangements are adopted. Evidence from 104 IMF arrangements in 74 developing countries during 1973-91 indicates that there are important differences between the characteristics of countries about to undergo a program and...

While the literature on external debt repayment performance by sovereign debtors is extensive, repayment performance vis-à-vis the International Monetary Fund has not been dealt with separately. Given differences between the IMF and other providers of financial resources, this paper considers...

To update a famous old statistic: a political leader in a developing country is almost twice as likely to lose office in the six months following a currency crash as otherwise. This difference, which is highly significant statistically, holds regardless of whether the devaluation takes place in...

The paper presents a model of optimum currency areas using a general equilibrium approach with regionally differentiated goods. The choice of a currency union depends upon the size of the underlying disturbances, the correlation between these disturbances, the costs of transactions across...

The effects of membership in the ERM are analyzed using vector autoregression techniques. The results indicate that while the ERM has had little effect on the nature of the shocks hitting the economies, it has had a significant effect on the response of member countries to these shocks, making...

Daily French and German interest rate changes since the Basle-Nyborg agreement of September 1987 are examined empirically. In particular, it is asked whether the shock associated with German unification altered the degree of leadership of German monetary policy in the exchange rate mechanism...

The impact of exchange rate regimes on domestic and foreign investment in the presence of a short-run Phillips curve is investigated. Producers may diversify internationally to increase the flexibility of production, thereby diversifying country-specific productivity and monetary shocks....

Historically, real exchange rate variability has been higher under flexible than under fixed exchange rates. Two explanations have been put forward. The neo-Keynesian view focuses on the interaction of volatile nominal exchange rates with sticky prices. The neoclassical approach maintains the...

The paper discusses the use of foreign exchange swaps by central banks. Such use has aimed at affecting domestic liquidity, managing foreign exchange reserves, and stimulating domestic financial markets. The discussion is illustrated using selected countries. The paper cautions about the use of...

Credibility and financing problems are important reasons why countries may seek to involve external institutions in the design and implementation of stabilization programs. In particular, governments may rely on external institutions to "enforce" programs that would otherwise lack credibility....