Is Transparency Good for You, and Can the IMF Help?

June 1, 2003

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Yongseok Shin, and Rachel Glennerster. Is Transparency Good for You, and Can the IMF Help?, (USA: International Monetary Fund, 2003) accessed December 23, 2024

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

This paper finds that reforms introduced by the IMF to promote transparency have created more informed markets and reduced borrowing costs for those emerging market countries that volunteered for them. Using a quarterly panel estimation with fixed country effects, we find that sovereign spreads fall following the adoption of three different transparency reforms. The effects are economically important, especially for those countries with low initial transparency. We use two-stage least squares to address any endogeneity in the timing of reforms exploiting internal IMF timetables that are unrelated to country events. Next, using a panel GARCH specification, we show that spreads move more than normal in the days immediately following publication of IMF country documents.

Subject: Credit ratings, Economic and financial statistics, Emerging and frontier financial markets, Financial markets, International capital markets, Money, Securities markets, Special Data Dissemination Standard (SDDS)

Keywords: Africa, Article IV, Article IV publication, Article IV report, Asia and Pacific, Borrowing costs, Capital markets, Central and Eastern Europe, Credit ratings, Data dissemination, Emerging and frontier financial markets, Emerging markets, GARCH, IMF, IMF country document, IMF document, IMF report, Institutions, International capital markets, Least squares, Market information, Middle East, News effect, Program country, Publication, Publication effect, Role of the IMF, ROSC, SDDS, Securities markets, Sovereign spreads, Special Data Dissemination Standard (SDDS), Transparency, Western Hemisphere, WP

Publication Details

Pages:

47
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/132
Stock No:

WPIEA1322003
ISBN:

9781451855401
ISSN:

1018-5941

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