The Role of IMF Support in Crisis Prevention

The Transmission of Financial Stress from Advanced to Emerging Economies

“…These work through spillovers from affected emerging economies back to advanced economies and also through spillovers within the group of emerging economies. 16 Country-specific sources of vulnerabilities to external shocks include solvency and liquidity problems, weaknesses in domestic balance sheets, and factors related to openness (Kaminsky and Reinhart 1999;Calvo 2005;Edwards 2005;Ghosh 2006;Calvo, Izquierdo, and Mejia 2004;Ramakrishnan and Zalduendo 2006;and Eichengreen, Gupta, and Mody 2006). These factors heighten susceptibility to capital account crises and currency crises and potentially increase the rate of transmission of stress originating in investor economies.…”

The Persistence of Capital Account Crises

“…Another strand of literature emphasizes weaknesses in domestic balance sheets as a key cause of crises, and, sometimes, limited openness to trade (e.g., Ghosh (2006); Calvo, Izquierdo, and Mejia (2004), and Frankel and Cavallo (2004)). Countries' solvency and liquidity conditions are also identified as critical determinants of vulnerability to crises (e.g., Ramakrishnan and Zalduendo (2006);and Eichengreen, Gupta, and Mody (2006)). Studies that have focused on the macroeconomic impact of capital account crises and on policy responses typically find a large negative effect on output growth (Hutchison and Noy (2004);and Calvo, Izquierdo, and Talvi (2006)).…”

“…Ramakrishnan and Zalduendo (2006) are an exception. Their work includes estimates of duration for episodes of "market pressures.…”

The IMF's Data Dissemination Initiative After Ten Years

“…The episodes of exchange market pressure were identified byRamakrishnan and Zalduendo (2006).©International Monetary Fund. Not for Redistribution5 Exchange Rate Volatility and Reserves Transparency ^ 123 Source: Authors' calculations.…”