Catalysing private capital flows: Do IMF programmes work as commitment devices?

Ashoka Mody, Diego Saravia

Research output: Contribution to journalArticlepeer-review

59 Scopus citations


In this article, we examine whether IMF programmes influence the ability of developing country issuers to tap international bond markets and if they improve spreads paid on the bonds issued. We find that Fund programmes do not provide a uniformly favourable signalling effect. Instead, the evidence is most consistent with a positive effect of IMF programmes when they are viewed as likely to lead to policy reform and when undertaken before economic fundamentals have deteriorated significantly.The size of the Fund's programme matters but the credibility of a joint commitment by the country and the IMF appears to be critical.

Original languageEnglish (US)
Pages (from-to)843-867
Number of pages25
JournalEconomic Journal
Issue number513
StatePublished - Jul 2006
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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