IMF Conditionality and Program Ownership: A Case for Streamlined Conditionality

18 Pages Posted: 29 Jan 2006

See all articles by S. Nuri Erbas

S. Nuri Erbas

International Monetary Fund (IMF) - Middle East and Central Asia Department

Date Written: May 2003

Abstract

Program conditionality and ownership are important considerations in the IMF`s current rethinking of program design. This paper contributes to the literature by developing a theory of program conditionality and ownership on the basis of Cumulative Prospect Theory. The policymaker may value a set of programs, each with fewer conditions, more than an extended program with as many conditions. This valuation bias is greater in ambiguity (Knightian uncertainty) than under uncertainty. If greater valuation of a program engenders more explicit and implicit ownership, then programs with fewer conditions may have a better chance of success. Less is more.

Keywords: program conditionality and ownership, uncertainty, ambiguity

JEL Classification: D78, D81

Suggested Citation

Erbas, S. Nuri, IMF Conditionality and Program Ownership: A Case for Streamlined Conditionality (May 2003). IMF Working Paper No. 03/98, Available at SSRN: https://ssrn.com/abstract=879174

S. Nuri Erbas (Contact Author)

International Monetary Fund (IMF) - Middle East and Central Asia Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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