The Impact of Bailouts on the Probability of Sovereign Debt Crises: Evidence from IMF-Supported Programs
This paper studies the role of IMF-supported programs in mitigating the likelihood of subsequent sovereign defaults in borrowing countries. Using a panel of 106 developing countries from 1970 to 2016 and an entropy balancing methodology, we find that IMF-supported programs significantly reduce the l...
| Main Author: | |
|---|---|
| Other Authors: | |
| Format: | eBook |
| Language: | English |
| Published: |
Washington, D.C.
International Monetary Fund
2019
|
| Series: | IMF Working Papers
|
| Subjects: | |
| Online Access: | |
| Collection: | International Monetary Fund - Collection details see MPG.ReNa |
| Summary: | This paper studies the role of IMF-supported programs in mitigating the likelihood of subsequent sovereign defaults in borrowing countries. Using a panel of 106 developing countries from 1970 to 2016 and an entropy balancing methodology, we find that IMF-supported programs significantly reduce the likelihood of subsequent sovereign defaults. This finding is robust to different specifications of the entropy balancing and alternative identification strategies. Our results suggest that a country that signs a program with the IMF, typically experiences a slight improvement in its sovereign credit rating and a decrease in both government debt-to-GDP and fiscal deficit-to-GDP. |
|---|---|
| Physical Description: | 38 pages |
| ISBN: | 9781484393413 |