From Crisis to IMF-Supported Program : Does democracy impede the speed required by financial markets?

Author/Editor:

Ashoka Mody ; Diego Saravia

Publication Date:

December 1, 2008

Electronic Access:

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Disclaimer: 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

Summary:

Has the spread of democracy and political participation impeded the need for speed required by financial markets and the elevated threat of contagion across borders? We examine the time span between the onset of a financial crisis and the agreement on an IMF-supported adjustment program. This span appears to have decreased over time. More precisely, we find that the time from a crisis to the approval of a program has been smaller the more serious the crisis. Importantly, this responsiveness to a widening range of financial vulnerabilities has increased with growing financial integration. Democracies, particularly those with checks and balances, have been sensitive to time pressures.

Series:

Working Paper No. 08/276

Subject:

English

Publication Date:

December 1, 2008

ISBN/ISSN:

9781451871340/1018-5941

Stock No:

WPIEA2008276

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

33

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