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Efficiency and Legitimacy: Trade-Offs in IMF Governance

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  • Mr. Carlo Cottarelli

Abstract

Designing appropriate governance structures for an international financial institution such as the IMF is difficult, because steps to enhance the legitimacy of such an institution through constraints on its decision-making process may affect its operational efficiency. Potential trade-offs between legitimacy and efficiency exist for any public institution but are arguably more severe for an international one, because delegating power to it politically controversial and, thus, likely to imply tighter constraints. The paper also underscores that the trade-offs are not absolute, however: they depend on the specific ways in which legitimacy is pursued-that is, on the specific constraints that are set. Strategic reforms should, thus, aim at improving the terms of the trade-off by exploring steps that are Pareto-improving in the dimensions of legitimacy and efficiency.

Suggested Citation

  • Mr. Carlo Cottarelli, 2005. "Efficiency and Legitimacy: Trade-Offs in IMF Governance," IMF Working Papers 2005/107, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2005/107
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    References listed on IDEAS

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    1. Woods, Ngaire, 2000. "The Challenge of Good Governance for the IMF and the World Bank Themselves," World Development, Elsevier, vol. 28(5), pages 823-841, May.
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    Cited by:

    1. Robert Lavigne & Philipp Maier & Eric Santor, 2009. "Renewing IMF surveillance: Transparency, accountability, and independence," The Review of International Organizations, Springer, vol. 4(1), pages 29-46, March.
    2. Nedergaard, Peter, 2011. "The political economy of the clean development mechanism (CDM) governance system," MPRA Paper 33095, University Library of Munich, Germany.
    3. Manuela Moschella, 2014. "Monitoring Macroeconomic Imbalances: Is EU Surveillance More Effective than IMF Surveillance?," Journal of Common Market Studies, Wiley Blackwell, vol. 52(6), pages 1273-1289, November.
    4. Mr. Jonathan David Ostry & Mr. Jeromin Zettelmeyer, 2005. "Strengthening IMF Crisis Prevention," IMF Working Papers 2005/206, International Monetary Fund.
    5. Robert Lavigne & Philipp Maier & Eric Santor, 2007. "A Vision for IMF Surveillance," Staff Working Papers 07-37, Bank of Canada.
    6. Philipp Maier & Eric Santor, 2008. "Reforming the IMF: Lessons from Modern Central Banking," Discussion Papers 08-6, Bank of Canada.

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