The Impact of Bailouts on the Probability of Sovereign Debt Crises: Evidence from IMF-Supported Programs
Author | : Hippolyte W. Balima |
Publisher | : International Monetary Fund |
Total Pages | : 38 |
Release | : 2019-01-11 |
ISBN-10 | : 9781484393413 |
ISBN-13 | : 1484393414 |
Rating | : 4/5 (414 Downloads) |
Download or read book The Impact of Bailouts on the Probability of Sovereign Debt Crises: Evidence from IMF-Supported Programs written by Hippolyte W. Balima and published by International Monetary Fund. This book was released on 2019-01-11 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.