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Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions

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Author Info
Axel Dreher () (KOF Swiss Economic Institute, ETH Zurich)
Nathan Jensen (Department of Political Science, Washington University in St. Louis)

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Abstract

In this paper we analyze whether IMF conditionality is exclusively designed in line with observable economic indicators or, alternatively, whether it is partly driven by its major shareholder, the US. A panel data analysis of 206 letters of intent from 38 countries over the period 4/1997-2/2003 reveals that the number of conditions on an IMF loan depends on a borrowing country’s voting pattern in the UN General Assembly. Closer allies of the United States (and other G7 countries) receive IMF loans with fewer conditions especially prior to elections. These results contribute to the current public policy debates on the role and process of setting IMF conditions, and provide broader insights into the influence of the United States and other G7 countries in international institutions.

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Publisher Info
Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 05-118.

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Length: 33 pages
Date of creation: Dec 2005
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Handle: RePEc:kof:wpskof:05-118

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Related research
Keywords: IMF; conditionality; elections; UN General Assembly voting compliance;

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Find related papers by JEL classification:
F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Axel Dreher, 2002. "The Development and Implementation of IMF and World Bank Conditionality," International Finance 0207003, EconWPA. [Downloadable!]
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  2. Axel Dreher & Roland Vaubel, 2003. "The Causes and Consequences of IMF Conditionality," International Finance 0309004, EconWPA, revised 17 Oct 2003. [Downloadable!]
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  3. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 243-77, Fall.
  4. Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Axel Dreher & Jan-Egbert Sturm, 2006. "Do IMF and World Bank Influence Voting in the UN General Assembly?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  6. Kenneth Rogoff, 1990. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Blackwell Publishing, vol. 42(2), pages 169-90, April. [Downloadable!] (restricted)
  8. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August. [Downloadable!] (restricted)
  9. Jan-Egbert Sturm & Helge Berger & Jakob de Haan, 2005. "Which Variables Explain Decisions On Imf Credit? An Extreme Bounds Analysis," Economics and Politics, Blackwell Publishing, vol. 17, pages 177-213, 07. [Downloadable!] (restricted)
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  10. Axel Dreher & Roland Vaubel, 2004. "Do IMF and IBRD Cause Moral Hazard and Political Business Cycles? Evidence from Panel Data," Open Economies Review, Springer, vol. 15(1), pages 5-22, January. [Downloadable!] (restricted)
  11. Alesina, Alberto & Tabellini, Guido, 1988. "Credibility and politics," European Economic Review, Elsevier, vol. 32(2-3), pages 542-550, March. [Downloadable!] (restricted)
  12. Grieco, Joseph M., 1988. "Anarchy and the limits of cooperation: a realist critique of the newest liberal institutionalism," International Organization, Cambridge University Press, vol. 42(03), pages 485-507, June. [Downloadable!]
  13. Robert J. Barro & Jong-Wha Lee, 2002. "IMF Programs: Who is Chosen and What Are the Effects?," NBER Working Papers 8951, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Axel Dreher, 2003. "The influence of elections on IMF programme interruptions," The Journal of Development Studies, Taylor and Francis Journals, vol. 39(6), pages 101-120, January. [Downloadable!] (restricted)
  15. Roland Vaubel & Axel Dreher & Ugurlu Soylu, 2003. "Staff Growth in International Organizations: A Principal-Agent Problem? An Empirical Analysis," Public Economics 0306006, EconWPA, revised 08 Jul 2003. [Downloadable!]
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  16. Boockmann, Bernhard & Dreher, Axel, 2003. "The contribution of the IMF and the World Bank to economic freedom," European Journal of Political Economy, Elsevier, vol. 19(3), pages 633-649, September. [Downloadable!] (restricted)
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  17. Axel Dreher, 2005. "Does the IMF Influence Fiscal and Monetary Policy?," Journal of Policy Reform, Taylor and Francis Journals, vol. 8(3), pages 225-238, September. [Downloadable!] (restricted)
  18. Axel Dreher, 2004. "A Public Choice Perspective of IMF and World Bank Lending and Conditionality," Public Choice, Springer, vol. 119(3_4), pages 445-464, 06. [Downloadable!]
  19. Axel Dreher, 2004. "IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality," International Finance 0404004, EconWPA, revised 25 Apr 2004. [Downloadable!]
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  20. Graham Bird & Dane Rowlands, 2003. "Political Economy Influences Within the Life-Cycle of IMF Programmes," The World Economy, Blackwell Publishing, vol. 26(9), pages 1255-1278, 09. [Downloadable!] (restricted)
  21. Axel Dreher, 2004. "The Influence of IMF Programs on the Re-election of Debtor Governments," Economics and Politics, Blackwell Publishing, vol. 16(1), pages 53-76, 03. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Axel Dreher & Peter Nunnenkamp & Rainer Thiele, 2006. "Does US Aid Buy UN General Assembly Votes? A Disaggregated Analysis," Kiel Working Papers 1275, Kiel Institute for the World Economy. [Downloadable!]
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  2. Axel Dreher & Jan-Egbert Sturm & James Raymond Vreeland, 2006. "Does Membership on the UN Security Council Influence IMF Decisions? Evidence from Panel Data," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Hefeker, Carsten, 2005. "Project Aid or Budget Aid? The Interests of Governments and Financial Institutions," Discussion Paper Series 26381, Hamburg Institute of International Economics. [Downloadable!]
    Other versions:
  4. Pol Antràs & Gerard Padró i Miquel, 2008. "Foreign Influence and Welfare," NBER Working Papers 14129, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Fleck, Robert K. & Kilby, Christopher & Fleck, Robert K., 2001. "World Bank Independence: A Model and Statistical Analysis of U.S. Influence," Vassar College Department of Economics Working Paper Series 53, Vassar College Department of Economics. [Downloadable!]
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  6. Thiele, Rainer & Nunnenkamp, Peter & Dreher, Axel, 2007. "Do Donors Target Aid in Line with the Millennium Development Goals? A Sector Perspective of Aid Allocation," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
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  7. Kilby, Christopher, . "The Political Economy of Conditionality: An Empirical Analysis of World Bank Enforcement," Vassar College Department of Economics Working Paper Series 92, Vassar College Department of Economics. [Downloadable!]
  8. Axel Dreher & Stefanie Walter, 2008. "Does the IMF Help or Hurt? The Effect of IMF programs on the likelihood and outcome of currency crises," KOF Working papers 08-186, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  9. Rainer Thiele & Peter Nunnenkamp & Axel Dreher, 2006. "Sectoral Aid Priorities: Are Donors Really Doing their Best to Achieve the Millennium Development Goals?," KOF Working papers 06-124, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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  10. Axel Dreher & Jan-Egbert Sturm, 2006. "Do IMF and World Bank Influence Voting in the UN General Assembly?," KOF Working papers 06-137, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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  11. Axel Dreher & Bernhard Boockmann, 2007. "Do Human Rights Offenders Oppose Human Rights Resolutions in the United Nations?," KOF Working papers 07-163, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  12. Anwar, Mumtaz, 2006. "The Political Economy Of International Financial Institutions’ Lending To Pakistan," MPRA Paper 5601, University Library of Munich, Germany, revised 01 Dec 2006. [Downloadable!]
  13. Axel Dreher & Silvia Marchesi & James Raymond Vreeland, 2007. "The Politics of IMF Forecasts," Working Papers 124, University of Milano-Bicocca, Department of Economics, revised Oct 2007. [Downloadable!]
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  14. Fleck, Robert K. & Kilby, Christopher, 2005. "How Do Political Changes Influence U.S. Bilateral Aid Allocations? Evidence from Panel Data," Vassar College Department of Economics Working Paper Series 67, Vassar College Department of Economics. [Downloadable!]
    Other versions:
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