Nothing to hide: Commitment to, compliance with, and impact of the special data dissemination standard

Abstract

Understanding why states voluntarily cede power to international institutions, and if those institutions fulfill their stated goals, remain a pressing question in international relations. In order to evaluate the material and normative logics that may drive this type of behavior, this paper considers state commitment to and compliance with the Special Data Dissemination Standard (SDDS) initiative launched by the IMF in 1996. This effort seeks to enhance the availability of comprehensive economic data based on best dissemination practices to facilitate pursuing sound macroeconomic policies. Using panel data on 120 countries during the 1996–2011 period, we find that commitment to the SDDS occurs when costs for states are low, and that compliance with the SDDS initiative is associated with increased data transparency after controlling for self‐section bias. Our results are robust to controlling for endogeneity, alternative sample, and estimation methods.

Transparency and currency crises

“…Vadlamannati, Cooray, and Brazys (2018) find that compliance with the SDDS initiative is positively associated with the HRV index. Vadlamannati, Cooray, and Brazys (2018) find that compliance with the SDDS initiative is positively associated with the HRV index.…”

“…I also attempt to examine how compliance with the IMF's SDDS initiative influences currency crises since it was designed to tackle the problems of data transparency and help countries stave off financial crises. Vadlamannati, Cooray, and Brazys (2018) find that compliance with the SDDS initiative is positively associated with the HRV index. As presented in Columns 7-9 of Table 2, the coefficient estimate on SDDS initiative is negative but statistically insignificant.…”

“…An anonymous reviewer suggests this instrumentation strategy because of important concerns about endogeneity, given the finding of Vadlamannati et al (2018) that macroeconomic crises, including currency, banking and debt crises, tend to increase data transparency. I begin by estimating a conditional fixed effects logit model.…”

“…To the extent that unobserved characteristics across countries are correlated with dependent and independent variables, controlling for country fixed effects can help mitigate omitted variable bias by investigating 12 This finding prevents me from using either spatial lags or regional averages of transparency indices as an instrument for a country's level of transparency since it violates the exclusion restriction. An anonymous reviewer suggests this instrumentation strategy because of important concerns about endogeneity, given the finding of Vadlamannati et al (2018) that macroeconomic crises, including currency, banking and debt crises, tend to increase data transparency. However, this finding actually mitigates the concerns about endogeneity due to reverse causality because if reverse causality is driving the main results, the coefficient of transparency should be positive, not negative.…”

Towards E-compliance

“…Civil society should also be effective, but in many countries, they are disorganised or non-existent to convert information into accountability. Vadlamannati, Cooray & Brazys (2018) examine the commitments to compliance with the IMF Special Data Dissemination Standards (SDDS) and concludes that compliance happens when the costs to state is low and there is material reward or punishment domestically and internationally with normative and ideational logic. Furthermore, "countries which were already more transparent, typically rich and democratic, were more likely to join the SDDS as they faced lower material costs and reaped larger material and normative benefits compared to less transparent states" (p.70).…”