...nd a negative coe^ient for this variable.
We then de...ned the dummies. The ...rst one is BEF whose coe^ient should
be signi.cant and greater than zero. The other one is BB, which equals one for
a country which has adopted the Baker (1986-’88) and/or the Brady plan (1989-
’94).17 Baker and Brady plan have generally involved middle-income developing
countries. We expect the coe^ient of this dummy to be signi.cantly greater than
zero indicating that those countries which adhered to these plans were more likely
than other countries to adopt an IMF programme and accept the conditionality
that goes with it.
Compared to the papers of the related literature on IMF arrangements, we
generally opted for a more parsimonious speci.cation (given the limited number
of our observati ons). We did not include either a regressor for the terms of trade
or for the foreign real exchange rates (we actually tried to insert the latter but we
found many missing data in those series). Besides, we believe that the external
factors are already “captured” by the variables we incl uded (like CA, BOP and
EXP).
We did not include a variable for Eurocurrency credit (i.e., private capital
market, in particular the Eurocurrency market), which was considered by Bird and
Orme in order to investigate whether the Fund and the Eurocur rency market were
substitutes or complementary sources of .nance. However, in earlier estimates,
we had a quite similar regressor (i.e., “non fund ...nancing tows”) but it was not
found to be signi.cant. The variable “government revenue” could be one of the
possible instruments to be used to identify the equation of IMF determinants and
we have already explained in Section 4.1 (on the identi.cation problem) why we
could not use it.
17The Baker plan set targets for bank and o^ial lending, called for structural reforms in
debtor economies and, in its latter part, exp erim ent ed market based debt restructuring. The
Brady plan shifted the attention from a co-ordinated lend ing to the reduction and reschedu li ng
of the existing debt.
23