Abstract
This chapter reports the data, statistical models and results obtained from testing Hypothesis 2 which states that government repression (abuse) of the physical integrity rights of citizens is likely to increase in IMF-assisted countries in the immediate aftermath of the “twin” outbreak of sudden reversal and currency crisis. We begin by discussing our time-series cross-sectional (TSCS) sample to test Hypothesis 2. We then describe the operationalization of two alternative measures of the dependent variable. Each of these two measures essentially operationalize an ordinal scale of government repression. This is followed by an in-depth discussion of the operationalization of the independent variable in Hypothesis 2: the joint occurrence of financial crisis (sudden reversal and currency crisis episodes) in IMF program-participating country-years or, in other words, financial crisis that occur in countries observed under IMF programs. We then estimate a variety of statistical models that address numerous econometric challenges that emerge from testing our second testable hypothesis. These results provide robust statistical support for Hypothesis 2.
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Notes
- 1.
These eight types of programs: Stand-by and extended stand-by arrangement, Supplementary Reserve Facility, Extended Fund Facility, Contingency Funding facility, Buffer Stock Funding Facility, Currency Stabilization Facility, Structural Adjustment Fund and the Poverty Reduction and Growth Facility.
- 2.
The results reported below remain robust when the ordered probit model is estimated with country fixed effects. However, as shown by Bester and Hansen (2009) and Carro and Traferri (2009), incorporating fixed effects in an ordered probit model that is estimated on finite samples leads to an incidental parameters problem that engenders inconsistent and inefficient estimates. Therefore, we choose to present the results from the ordered probit models that are estimated with random effects.
- 3.
Our results remain robust when we follow Carter and Signorino (2010) and include a cubic polynomial in the specification to account for temporal dependence in the data. The obtained results also remain robust in the OP models that are estimated without random effects and time dummies (not reported to save space but available on request).
- 4.
These variables include for example log gdp per capita, fixed exchange rate, log reserves and external debt.
- 5.
For our bootstraps, m = 1000. All control variables were held at their means or modes.
- 6.
m = 1000 for the bootstraps. All control variables were held at their means or modes.
- 7.
The marginal effect of the binary financial crisis measure on the probability of “widespread repression” is also substantively negligible and statistically insignificant.
- 8.
For our bootstraps, m =1000. All control variables were held at their means or modes.
- 9.
We obtain similar results when we assessed the marginal effect of a 0 to 1 change of just the binary IMF program measure on the following level of the ordinal repression measure: widespread repression =4.
- 10.
Calculated as weighted average magnitude of all districts.
- 11.
The results reported above hold even when each of the augmented OP models is estimated without random effects and year dummies, and the augmented xtpcse model is estimated with random effects but does not include year dummies.
- 12.
For example, output loss, log inflation, terms of trade shock and the lag of the IMF program dummy each have a positive and significant effect on IMF in the first stage of the double-selection OP model. In the second stage, the effect of the interaction term IMF x shadow bank concentration on sudden reversal crisis is positive and highly significant as well while, M2/reserves, credit growth and veto players are each statistically insignificant.
- 13.
The largest and mean VIF value in the OP models is less than 10 and greater than 1 respectively; thus, multicollinearity is not a problem. The Breusch-Godfrey LM test failed to reject the null of no serial correlation in the outcome and selection equations respectively. The RESET test shows that there is no omitted variable bias problem; the Jarque–Bera test shows that the residuals are distributed normally.
- 14.
- 15.
Ibid.
- 16.
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Mukherjee, B., Yadav, V. (2024). State Repression, the IMF and Financial Crisis: Empirical Evidence. In: The IMF, Financial Crisis, and Repression of Human Rights. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-55893-1_5
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