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This paper finds that reforms introduced by the IMF to promote transparency have created more informed markets and reduced borrowing costs for those emerging market countries that volunteered for them. Using a quarterly panel estimation with fixed country effects, we find that sovereign spreads fall following the adoption of three different transparency reforms. The effects are economically important, especially for those countries with low initial transparency. We use two-stage least squares to address any endogeneity in the timing of reforms exploiting internal IMF timetables that are unrelated to country events. Next, using a panel GARCH specification, we show that spreads move more than normal in the days immediately following publication of IMF country documents.

Finance: General --- Money and Monetary Policy --- Data Transmission Systems --- International Monetary Arrangements and Institutions --- Methodology for Collecting, Estimating, and Organizing Macroeconomic Data --- Data Access --- General Financial Markets: General (includes Measurement and Data) --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Data capture & analysis --- Finance --- Monetary economics --- Special Data Dissemination Standard (SDDS) --- Securities markets --- Emerging and frontier financial markets --- Credit ratings --- International capital markets --- Economic and financial statistics --- Financial markets --- Money --- Data transmission systems --- Capital market --- Financial services industry --- Argentina

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We quantify the role of financial frictions and the initial misallocation of resources in explaining development dynamics. Following a reform that triggers efficient reallocation of resources, our model economy with financial frictions converges slowly to the new steady state—it takes twice as long to cover half the distance to the steady state as the neoclassical growth model. Investment rates and total factor productivity start out low and rise over time. These model dynamics are endogenously determined by the extent of initial resource misallocation and the degree of financial frictions. We present data from post-war miracle economies on the evolution of macro aggregates, factor reallocation, and establishment size distribution, which support the aggregate and micro-level implications of our theory.

Zonder onderwerpscode: economie

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Income differences across countries primarily reflect differences in total factor productivity (TFP). More disaggregated data show that the TFP gap between rich and poor countries varies systematically across industrial sectors of the economy: Poor countries are particularly unproductive in tradable and investment goods sectors. In this paper, we develop a quantitatively-oriented framework to explain such cross-country patterns in aggregate and sectoral TFP. We start by documenting that an important distinction between sectors is their average establishment size. For example, establishments in tradable and investment goods sectors operate at much larger scales than those in the non-tradable sector. In our model, sectors with larger scales of operation have more financing needs, and are hence disproportionately affected by financial frictions. Our quantitative exercises show that financial frictions account for a substantial part of the observed cross-country patterns in TFP, both at the aggregate and at the sectoral level. Our model also has novel implications for the impact of financial frictions on the relative scale between the tradable and the non-tradable sectors, which are shown to be consistent with the data.

Zonder onderwerpscode: economie

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We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact on per-capita income, because the increase in TFP is counterbalanced by lower capital accumulation resulting from the redistribution of income from high-savers to low-savers. Nevertheless, the vast majority of the population will be positively affected by microfinance through the increase in equilibrium wages.

Zonder onderwerpscode: economie

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We review both the theoretical and empirical literature on entrepreneurship and financial frictions, with an emphasis on the heterogeneous and dynamic micro-level implications of financial frictions for macro development.

Zonder onderwerpscode: economie