Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/50388
Authors: 
Dreher, Axel
Walter, Stefanie
Year of Publication: 
2008
Series/Report no.: 
KOF working papers // Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 186
Abstract: 
Using panel data for 68 countries over the period 1975-2002 this paper examines how IMF programs, disbursed loans, and compliance with conditionality affect the risk of currency crises and the outcome of such crises. Specifically, we investigate whether countries with previous IMF intervention are more likely to experience currency crises. In a second step, we analyze the IMF's impact on a country's decision to adjust the exchange rate, once a crisis occurred. We find that IMF involvement reduces the probability of a crisis. Once in a crisis, IMF programs significantly increase the probability that the authorities devalue the exchange rate. The amount of loans and compliance with conditionality have no impact. Our results suggest that the IMF - contrary to the Fund's critics - does indeed fulfill its functions of promoting exchange rate stability and helping its members to correct macroeconomic imbalances.
Subjects: 
IMF programs
growth
compliance
conditionality
JEL: 
F33
F34
O57
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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