The Principal Components Approach To Quota Formulation At The Imf
AbstractThis paper explores and supports the use of the principal components analysis to objectively establish countries’ relative economic size and determine variables’ weights in a new IMF quota formula. This approach shows a rebalancing of quotas shares in favor of developing countries over time but suggests that PCA-generated quota formulas can only guide and not determine IMF quota structure. The simulation of ad hoc quota increases using PCA-generated quota formulas indicates that a rebalancing of actual quota shares and voting power in favor of developing countries, while preserving low-income countries voting share, is achievable if advanced economies forego increases in their quotas and total basic votes are at least tripled.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7618.
Date of creation: 10 Mar 2008
Date of revision:
International Monetary Fund; Quota Formula; Principal Components Analysis;
Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
- C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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- François Combarnous, 2003. "Le développement de l'humain comme préalable au développement économique : l'apport de l'analyse en composantes principales," Documents de travail 84, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
- Abbas Mirakhor & Iqbal Mehdi Zaidi, 2006. "Rethinking the Governance of the International Monetary Fund," IMF Working Papers 06/273, International Monetary Fund.
- Dejian Lai, 2000. "Temporal Analysis of Human Development Indicators: Principal Component Approach," Social Indicators Research, Springer, vol. 51(3), pages 331-366, September.
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