The IMF and the Liberalization of Capital Flows

Ilan Noy and Joseph Joyce

No 200706, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: We evaluate the claim that the International Monetary Fund precipitated financial crises during the 1990s by pressuring countries to liberalize their capital accounts prematurely. Using data from a panel of developing economies from 1982-98, we examine whether the changes in the regime governing capital flows took place during participation in IMF programs. We find evidence that IMF program participation is correlated with capital account liberalization episodes during the 1990s. We verify the robustness of our results using alternative indicators of capital account openness. To determine whether decontrol was premature, we compare the economic and financial characteristics of countries that decontrolled during IMF programs with those of countries who did so independently and find some evidence of IMF-led premature liberalizations.

Keywords: IMF programs; capital account liberalization (search for similar items in EconPapers)
JEL-codes: F3 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-01
New Economics Papers: this item is included in nep-ifn
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http://www.economics.hawaii.edu/research/workingpapers/WP_07-6.pdf First version, 2007 (application/pdf)

Related works:
Journal Article: The IMF and the Liberalization of Capital Flows (2008)
Working Paper: The IMF and the Liberalization of Capital Flows (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hai:wpaper:200706

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