Agency and communication problems in IMF conditional lending
AbstractThe combination of special interest politics (agency problems) and informational asymmetries presents serious problems as the implementation of Fund conditionality is concerned. In this paper we focus on the role that the transmission of information between the IMF and the borrowing government has for the design of the most e??cient "incentive contract." Specifically, we find that when agency problems are especially severe, and/or IMF information is very valuable, a centralized control is indeed optimal (conventional conditionality). To the contrary, when local knowledge is more important than the agency bias we expect delegation (ownership) to be the optimal incentive scheme.
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Bibliographic InfoPaper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 139.
Length: 30 pages
Date of creation: Jun 2008
Date of revision: Jun 2008
IMF conditionality; delegation; communication;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- N2 - Economic History - - Financial Markets and Institutions
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