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The International Monetary Fund: 70 Years of Reinvention

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  • Reinhart, Carmen M.
  • Trebesch, Christoph

Abstract

A sketch of the International Monetary Fund's 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a "demand driven" theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively "new" IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became the key focus after the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing economies and have now migrated to advanced economies. As a consequence, the IMF has engaged in "serial lending," with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency;this has been most evident in Greece since 2010. We conclude with the observation that the IMF's role as an international lender of last resort is endangered.

Suggested Citation

  • Reinhart, Carmen M. & Trebesch, Christoph, 2016. "The International Monetary Fund: 70 Years of Reinvention," Munich Reprints in Economics 43462, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:43462
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    Citations

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    Cited by:

    1. Carmen M. Reinhart & Vincent Reinhart & Christoph Trebesch, 2016. "Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815-2015," American Economic Review, American Economic Association, vol. 106(5), pages 574-580, May.
    2. Scheubel, Beatrice & Tafuro, Andrea & Vonessen, Benjamin, 2018. "Stigma? What stigma? A contribution to the debate on financial market effects of IMF lending," Working Paper Series 2198, European Central Bank.
    3. Corsetti, G. & Erce, A. & Uy, T., 2017. "Official Sector Lending Strategies During the Euro Area Crisis," Cambridge Working Papers in Economics 1730, Faculty of Economics, University of Cambridge.
    4. Trebesch, Christoph & Zabel, Michael, 2017. "The output costs of hard and soft sovereign default," European Economic Review, Elsevier, vol. 92(C), pages 416-432.
    5. Alice Nicole Sindzingre, 2015. "‘Policy Externalisation’ Inherent Failure: International Financial Institutions’ Conditionality in Developing Countries," Post-Print hal-01668367, HAL.
    6. Corsetti, Giancarlo & Erce, Aitor & Uy, Timothy, 2018. "Debt Sustainability and the Terms of Official Support," CEPR Discussion Papers 13292, C.E.P.R. Discussion Papers.
    7. repec:pal:imfecr:v:66:y:2018:i:4:d:10.1057_s41308-018-0066-4 is not listed on IDEAS
    8. Irina Balteanu & Aitor Erce, 2018. "Linking Bank Crises and Sovereign Defaults: Evidence from Emerging Markets," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(4), pages 617-664, December.
    9. Axel Dreher & Katharina Michaelowa, 2008. "The political economy of international organizations," The Review of International Organizations, Springer, vol. 3(4), pages 331-334, December.
    10. Beatrice D. Scheubel & Andrea Tafuro & Benjamin Vonessen, 2018. "STIGMA? WHAT STIGMA? A Contribution to the Debate on the Effectiveness of IMF Lending," CESifo Working Paper Series 7036, CESifo Group Munich.
    11. repec:eee:jimfin:v:88:y:2018:i:c:p:171-190 is not listed on IDEAS
    12. Irina Andone & Beatrice D. Scheubel, 2017. "Memorable Encounters? Own and Neighbours' Experience with IMF Conditionality and IMF Stigma," CESifo Working Paper Series 6399, CESifo Group Munich.
    13. Kai Gehring & Valentin F. Lang, 2018. "Stigma or Cushion? IMF Programs and Sovereign Creditworthiness," CESifo Working Paper Series 7339, CESifo Group Munich.
    14. repec:bla:worlde:v:41:y:2018:i:10:p:2669-2690 is not listed on IDEAS
    15. Jean-Marc Bédhat Atsebi & Jean-Louis Combes & Alexandru Minea, 2019. "The trade costs of financial crises," Working Papers halshs-01990335, HAL.
    16. repec:eee:inecon:v:111:y:2018:i:c:p:190-213 is not listed on IDEAS
    17. Irina Balteanu & Aitor Erce, 2014. "Banking crises and sovereign defaults in emerging markets: exploring the links," Working Papers 1414, Banco de España;Working Papers Homepage.

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • N0 - Economic History - - General

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