How Does the Global Economic Environment Influence the Demand for IMF Resources

35 Pages Posted: 13 Nov 2006

See all articles by Selim Ali Elekdag

Selim Ali Elekdag

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: October 2006

Abstract

The main objective of this paper is to quantify the relationship between the global economic environment and the number of Stand-By Arrangements (SBAs). The results suggest that oil prices, world interest rates, and the global business cycle are the most influential indicators that affect the number of SBAs being requested. In addition, the empirical model seems to have reasonable accuracy when predicting SBAs. Furthermore, when oil prices, interest rates, and the global business cycle are adversely shocked by one standard deviation, the conditional probability of a SBA nearly doubles, implying an increase from about six to 12 SBAs. More critically, the model suggests that even a steady deterioration of the global economic climate would imply increasingly harsher conditions for developing and emerging market countries which may in turn significantly increase the demand for IMF resources.

JEL Classification: F01, F33, F34, F42

Suggested Citation

Elekdag, Selim Ali, How Does the Global Economic Environment Influence the Demand for IMF Resources (October 2006). IMF Working Paper No. 06/239, Available at SSRN: https://ssrn.com/abstract=944077

Selim Ali Elekdag (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

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