Abstract

A Combined Cross-Section/Time Series Analysis of the Demand for IMF Credit by the Non-Oil Developing Nations

The representation of the quantitative trends in the demand for IMF credit by the non-oil developing countries and the discussion on the relative importance of IMF resources to the financing of current-balance deficits is followed by an attempt to identify in econometric terms those economic variables that determine these countries’ borrowing behaviour vis-ä-vis the Fund. This analysis has been made with the help of combined cross-section/time-series data. According to the estimated econometric data, the model correlations derived from theoretical plausibility considerations provide a rather satisfactory explanation of the drawing behaviours under the individual financing facilities at least in the period 1975 – 1977. Although it must be borne in mind that – because of the requisite eligibility for the individual facilities, the conditionality connected with the drawings and the quantitative restrictions applicable to anyone country according to its quota – an explanatory quality of the type that is customary with reserve demand models cannot be expected anyhow, the results suggest that various influences have remained unconsidered in the theoretical and in the econometric analyses. It is to be assumed that these influences largely consist of non-quantifiable political and social aspects connected with the conditionality, which often influenced the relations between the IMF and its Members in the past. It would therefore be desirable if the IMF furnished country-specific information on the stabilization programmes it supports. The introduction of the individual economic policy requirements through dummy variables into the model would probably increase the model’s explanatory value.