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Staff Papers

, Volume 40, Issue 1, pp 53–88 | Cite as

Market Discipline

  • Timothy D. Lane
Article

Abstract

Under what circumstances can market forces prevent unsustainable borrowing? Effective market discipline requires that capital markets be open, that information on the borrower's existing liabilities be readily available, that no bailout be anticipated, and that the borrower respond to market signals. This paper explores the implications of these conditions and reviews some relevant empirical evidence.

JEL Classifications

G1 H3 

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Copyright information

© International Monetary Fund 1993

Authors and Affiliations

  • Timothy D. Lane

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