Toward a Lender of First Resort; Daniel Cohen and Richard Portes; IMF Working Paper 06/66; March 1, 2006
نویسندگان
چکیده
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. If interest rates (country spreads) rise, debt can rapidly be subject to a snowball effect, which becomes self-fulfilling with regard to the fundamentals themselves. This is a market imperfection, because we cannot be confident that the unaided market will choose the “good”over the “bad” equilibrium. We propose a policy intervention to deal with this structural weakness in the mechanisms of international capital flows. This is based on a simple taxonomy that breaks down the origin of crises into three components: confidence (spreads and currency crisis), fundamentals (real growth rate), and economic policy (primary deficit). Theory then suggests a set of circumstances in which a lender of first resort would be desirable. The policy would seek to short-circuit confidence crises, partly by using IMF support to improve ex ante incentives. Theory also illuminates the potential role of collective action clauses in reducing the risk of self-fulfilling debt crises. JEL Classification Numbers: F33, F34
منابع مشابه
Government Debt and Long-Term Interest Rates; Noriaki Kinoshita; IMF Working Paper 06/63; March 1, 2006
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper examines the relationship between government debt ...
متن کاملReal Exchange Rate Volatility and the Price of Nontradables in Sudden-Stop-Prone Economies: Enrique G. Mendoza; IMF Working Paper No. 06/88; March 1, 2006
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper shows that the dominant view that the high variabi...
متن کاملRevenue Authorities: Issues and Problems in Evaluating Their Success; Maureen Kidd and William Crandall; IMF Working Paper 06/240; October 1, 2006
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Revenue authorities (RAs) have been adopted by some countries...
متن کاملCorruption, Competition, and Contracts: A Model of Vote Buying; John Morgan and Felix Várdy; IMF Working Paper 06/11; January 1, 2006
متن کامل
A Principal-Agent Theory Approach to Public Expenditure Management Systems in Developing Countries; Luc Leruth and Elisabeth Paul; IMF Working Paper 06/204; September 1, 2006
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. A well-functioning public expenditure management (PEM) system...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2006