The point in time during a currency crisis when the IMF finally steps in tends to be relatively close to the trough of the crisis - at least it seems that way anecdotally. Is there any research that has looked into whether IMF interventions tend to be a good leading indicator for financial assets in the affecting country? The argument would be that calling in the IMF usually coincides with a country's leadership accepting that drastic measures are required, which in turn should also coincide with painful but necessary structural reforms (e.g. cleaning up the banking sector). On the other hand, the IMF doesn't always get things right and has been accused of making bad situations worse in some cases.

I have tried to find such research on my own but searching for "currency crisis" and "leading indicators" tends to produce results from the literature on leading indicators for currency crises.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.