con...rms our intuition about the e∏ect of IMF adoption on a debt rescheduling.
Finally, Rho hasa P-value equal to zero and with a negative sign, which means
that the unobservables in the two equations are negatively correlated. Thus, it
seems that the event IMF adoption positively a∏ect the debt rescheduling only
when we explain both of theτ using our control variables, that is variables that
capture only structural/macro factors and not short-term or stochastic factors (as
shocks are).
In the other speci.cations of the model we included.ve more variables among
the control variables. The rate of in≠ation (INFL), as another indicator of a
country’s economic performance and the total debt service (TDS), the total value
of reserves minus gold (RES), the current account (CA), the principal arrears
(PAR), as general indicators of a country’s ...nancial d^culty and the dummy
BB. None of them was found to be signi...cant.20 The rate of in≠ation, total debt
service, dummy BB and the total value of reserves had the correct signs (the .rst
three positive in both equations and the last one negative in the.rst equation and
positive in the second one, respectively) while the coe^ient of CA was negative
in the.rst equation and positive in the second. Dummy BB was found signi.cant,
in both equations, in a speci.cation where the dependent variable of the second
equation included both o^ial and private debt rescheduling (i.e., it was used the
“total debt rescheduled” series).
20 Variable PAR was actually signi.cant in the equation for the IM F arrangement (with a
negat ive sign) but not in the equation of t he debt recheduling.
27