A Theory of International Crisis Lending and IMF Conditionality /
We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the retu...
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| Main Author: | |
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| Other Authors: | , |
| Format: | Electronic eBook |
| Language: | English |
| Published: |
Washington, D.C. :
International Monetary Fund,
2008.
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| Series: | IMF Working Papers ;
Working Paper no. 08/236. |
| Subjects: | |
| Online Access: |
Full text (Emmanuel users only) |
| Summary: | We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the return of private capital, and ensuring repayment to the IMF. Nonetheless, moral hazard can arise if there are crisis externalities across countries (contagion) or if country authorities discount crisis costs too much relative to the national social optimum, or both. Moral hazard can be avoided by making IMF lending conditional on crisis prevention efforts-""ex ante"" conditionality. |
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| Item Description: | Available in PDF, ePUB, and Mobi formats on the Internet. |
| Physical Description: | 1 online resource (33 pages). |
| Bibliography: | Includes bibliographical references. |
| ISBN: | 1451915470 9781451915471 |
| ISSN: | 2227-8885 ; |