How Does the Global Economic Environment Influence the Demand for IMF Resources?

Author/Editor:

Selim A Elekdag

Publication Date:

October 1, 2006

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:

The main objective of this paper is to quantify the relationship between the global economic environment and the number of Stand-By Arrangements (SBAs). The results suggest that oil prices, world interest rates, and the global business cycle are the most influential indicators that affect the number of SBAs being requested. In addition, the empirical model seems to have reasonable accuracy when predicting SBAs. Furthermore, when oil prices, interest rates, and the global business cycle are adversely shocked by one standard deviation, the conditional probability of a SBA nearly doubles, implying an increase from about six to 12 SBAs. More critically, the model suggests that even a steady deterioration of the global economic climate would imply increasingly harsher conditions for developing and emerging market countries which may in turn significantly increase the demand for IMF resources.

Series:

Working Paper No. 2006/239

Subject:

Balance of payments need Business cycles Current account balance Financial crises Oil prices

Frequency:

Quarterly

English

Publication Date:

October 1, 2006

ISBN/ISSN:

9781451864991/1018-5941

Stock No:

WPIEA2006239

Pages:

33

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