IMF Conditionality and Program Ownership : A Case for Streamlined Conditionality
AbstractProgram conditionality and ownership are important considerations in the International Monetary Fund's current rethinking of program design. This paper contributes to the literature by developing a theory of program conditionality and ownership on the basis of Cumulative Prospect Theory. The policymaker may value a set of programs, each with fewer conditions, more than an extended program with as many conditions. This valuation bias is greater in ambiguity (Knightian uncertainty) than under uncertainty. If greater valuation of a program engenders more explicit and implicit ownership, then programs with fewer conditions may have a better chance of success. Less is more.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.
Volume (Year): 40 (2004)
Issue (Month): 3 (May)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024
ambiguity; IMF conditionality; program ownership; uncertainty;
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- Axel Dreher, 2008.
"IMF Conditionality: Theory and Evidence,"
KOF Working papers
08-188, KOF Swiss Economic Institute, ETH Zurich.
- Kutan, Ali M. & Muradoglu, Gulnur & Sudjana, Brasukra G., 2012. "IMF programs, financial and real sector performance, and the Asian crisis," Journal of Banking & Finance, Elsevier, vol. 36(1), pages 164-182.
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