Sovereign Borrowing Cost and the IMF's Data Standards Initiatives

Cady, John F.; Pellechio, Anthony J.

doi:10.5089/9781451863383.001

Cited by 25 publications

(20 citation statements)

References 8 publications

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“…Greater fiscal transparency is associated with lower borrowing costs, improvements in government effectiveness and lower government debt (Kemoe and Zhan 2018; Montes, Bastos, and de Oliveira 2019). Improvements in data collection practices for LIC debt can help policymakers undertake better-informed borrowing decisions, and have been associated with lower borrowing costs (Cady and Pellechio 2006;World Bank and IMF 2018). Principles and guidelines for debt transparency have been created, both by international institutions, such as the IMF's fiscal transparency code, and by the private sector (IIF 2019; IMF 2019c).…”

Section: Policies For Managing Debtmentioning

confidence: 99%

Can this Time be Different? Policy Options in Times of Rising Debt

Kose

Nagle²,

Ohnsorge

et al. 2020

SSRN Journal

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The Centre for Applied Macroeconomic Analysis in the Crawford School of Public Policy has been established to build strong links between professional macroeconomists. It provides a forum for quality macroeconomic research and discussion of policy issues between academia, government and the private sector. The Crawford School of Public Policy is the Australian National University's public policy school, serving and influencing Australia, Asia and the Pacific through advanced policy research, graduate and executive education, and policy impact.

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Section: Policies For Managing Debtmentioning

confidence: 99%

Can this Time be Different? Policy Options in Times of Rising Debt

Kose

Nagle²,

Ohnsorge

et al. 2020

SSRN Journal

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“…The Special Data Dissemination Standard, Reports on Observance of Standards and Codes, and Financial Sector Assessment Program have not only increased transparency (their principal goal), but peer pressure and the setting of “best practice” operational and regulatory rules seems to be exerting considerable pressure for improvement. These extra data seem to be feeding effectively into assessments of credit risk and, we can hope, investment decisions (see Cady & Pellechio, 2006). But it is worth noting that neither Indonesia nor Thailand have actually undergone Financial Sector Assessment Program yet (although both are planning to do so).…”

Section: The Global Responsementioning

confidence: 99%

Regional and Global Responses to the Asian Crisis

Grenville¹

2007

Asian Economic Policy Review

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This paper examines how economic policy-making changed as a result of the Asian crisis of 1997-1998, in the countries affected, in the region, and at the global level. It is perhaps surprising how little change has occurred in the broad approach to economic policy, but there is a much greater awareness of the vulnerabilities posed by large international capital flows. The broad tenets of the Washington Consensus, with its market-based policies, remain in place, but there is a recognition that well-functioning markets require complex institutions, rules, and procedures, and that these take time and effort to develop. Most of this institutional development will have to take place at the national level, but regional arrangements can offer support, and multilateral agencies, such as the International Monetary Fund, have learned from the crisis. 55 common paradigm or approach to economic policy has changed. Section 4 examines the global response -principally its effect on the International Monetary Fund (IMF), both operationally and in its understanding of how the world works. What Were the Lessons?There was no shortage of explanations offered for the crisis, including crony capitalism, corruption, exchange rates that were neither irrevocably fixed nor completely free to float, absence of democracy, governance deficiencies, moral hazard, and lack of transparency. Most of these explanations seem unsatisfying, if only because these circumstances had existed during three decades of extraordinary growth. For an economist, the key problem was excessive foreign capital inflows in the 5 years or so before the crisis, which fed a local asset boom and created the potential for volatile outflows (a "sudden-stop" capital crisis), combined with weak banking systems. This might be contrasted with earlier crisis experience, particularly in Latin America during the first half of the 1980s, where the capital reversals were symptomatic of other serious domestic macro imbalances. 2 For Asia, good macro policies (balanced budgets, modest current account deficits, 3 and tolerably low inflation) were not enough. The problems were not foreseen, and even as the crisis unfolded, its true dimensions were not recognized. With the nature and extent of the problem misdiagnosed and the centrality of the capital flow issues unacknowledged, the immediate policy response was "When in doubt, tighten policy." The tightening of fiscal policy was inappropriate, and the interest rates increases did little to counter the capital reversals. The lender-of-last-resort facilities -both domestic and foreign (via the IMF) were clumsy, with tranching of urgently needed foreign funds and distracting conditionality, and both bank restructuring and private debt resolution were tardy. It was not until the South Korean crisis late in 1997 that an effective response to capital flight and private debt rescheduling was developed or rediscovered. For a useful account of the crisis, although less critical of the IMF than this author, see International Monetary Fund Indepe...

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“…Closely related to the work of the IMF, some studies used the adoption of the IMF data standards initiatives, the publication of the IMF Article IV Staff reports, or the Reports on the Observance of Standards and Codes as a proxy for data transparency and analyzed their effects on various financial variables. 6 These studies assessed the effect of improved data transparency on sovereign borrowing costs (Glennerster and Shin 2003, Cady 2005, Cady and Pellechio 2006, Moretti 2012, foreign exchange spreads (Tiffin and others 2003), exchange rate volatility (Cady and Gonzalez-Garcia 2007), international capital flows (Hashimoto and Wacker 2016), and so on. 5 More transparency does not necessarily translate into financial market stability as it may encourage herding behaviors (Furman and others 1998, Morris and Shin 2002, Walsh 2007.…”

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confidence: 99%

The Effects of Data Transparency Policy Reforms on Emerging Market Sovereign Bond Spreads

Choi

Hashimoto²

2017

IMF Working Papers

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We find that data transparency policy reforms, reflected in subscriptions to the IMF's Data Standards Initiatives (SDDS and GDDS), reduce the spreads of emerging market sovereign bonds. To overcome endogeneity issues regarding a country's decision to adopt such reforms, we first show that the reform decision is largely independent of its macroeconomic development. By using an event study, we find that subscriptions to the SDDS or GDDS leads to a 15 percent reduction in the spreads one year following such reforms. This finding is robust to various sensitivity tests, including careful consideration of the interdependence among the structural reforms.

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Sovereign Borrowing Cost and the IMF's Data Standards Initiatives

Cited by 25 publications

References 8 publications

Can this Time be Different? Policy Options in Times of Rising Debt

Can this Time be Different? Policy Options in Times of Rising Debt

Regional and Global Responses to the Asian Crisis

The Effects of Data Transparency Policy Reforms on Emerging Market Sovereign Bond Spreads

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