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IMF‐Supported Programmes: Stimulating Capital to Non‐defaulting Countries
Author(s) -
van der Veer Koen J. M.,
de Jong Eelke
Publication year - 2013
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12044
Subject(s) - restructuring , default , private capital , debt , economics , capital (architecture) , financial system , debt restructuring , external debt , monetary economics , developing country , international economics , economic policy , finance , macroeconomics , economic growth , sovereign debt , political science , foreign direct investment , history , archaeology , sovereignty , politics , law
International Monetary Fund (IMF)‐supported programmes catalyse private capital to non‐defaulting countries. We find the IMF to be effective in stimulating private capital flows to middle‐income countries that participate in a Fund programme, but do not restructure their debt. IMF‐supported programmes help non‐defaulting countries to signal their willingness to reform and repay debts, thereby catalysing private capital. This signalling role appears to be more important for Fund catalysis, than the size of IMF lending.