TY  - JOUR
AU  - Eichengreen,Barry
AU  - Kletzer,Kenneth
AU  - Mody,Ashoka
TI  - The IMF in a World of Private Capital Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11198
PY  - 2005
Y2  - March 2005
UR  - http://www.nber.org/papers/w11198
L1  - http://www.nber.org/papers/w11198.pdf
N1  - Author contact info:
Barry Eichengreen
Department of Economics
University of California, Berkeley
549 Evans Hall 3880
Berkeley, CA 94720-3880
Tel: 510/642-2772
Fax: 510/643-0926
E-Mail: eichengr@econ.Berkeley.edu

Kenneth Kletzer
University of California, Santa Cruz
Department of Economics
217 Social Sciences 1
Santa Cruz, CA  95064
Tel: 408-459-3407
E-Mail: kkletzer@cats.ucsc.edu

Ashoka Mody
European Department
International Monetary Fund
700 19th Street, NW
Washington DC 20431
E-Mail: amody@imf.org
AB  - The IMF attempts to stabilize private capital flows to emerging markets by providing public monitoring and emergency finance. In analyzing its role we contrast cases where banks and bondholders do the lending. Banks have a natural advantage in monitoring and creditor coordination, while bonds have superior risk sharing characteristics. Consistent with this assumption, banks reduce spreads as they obtain more information through repeat transactions with borrowers. By comparison, repeat borrowing has little influence in bond markets, where publicly-available information dominates. But spreads on bonds are lower when they are issued in conjunction with IMF-supported programs, as if the existence of a program conveyed positive information to bondholders. The influence of IMF monitoring in bond markets is especially pronounced for countries vulnerable to liquidity crises.
ER  -