Agency and Communication in IMF Conditional Lending: Theory and Empirical Evidence

CESifo Working Paper Series No. 2574

KOF Working Paper No. 218

54 Pages Posted: 11 Mar 2009

See all articles by Silvia Marchesi

Silvia Marchesi

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS); Università degli Studi di Milano-Bicocca - Center for European Studies (CefES); University of Milan - Centro Studi Luca d'Agliano (LdA)

Laura Sabani

University of Florence

Axel Dreher

Heidelberg University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2009

Abstract

We focus on the role that the transmission of information between a multilateral (the IMF) and a country has for the optimal design of conditional reforms. Our model predicts that when agency problems are especially severe, and/or IMF information is valuable, a centralized control is indeed optimal. To the contrary, when local knowledge is more important than the agency bias we expect delegation to dominate. Controlling for economic and political factors, our empirical tests show that the number of IMF conditions is lower in countries with a greater social complexity, while it increases with the bias of the countries' authorities, openness, and transparency, consistently with the theory.

Keywords: IMF conditionality, delegation, communication, panel data

JEL Classification: C23, D82, F33, N2

Suggested Citation

Marchesi, Silvia and Sabani, Laura and Dreher, Axel, Agency and Communication in IMF Conditional Lending: Theory and Empirical Evidence (March 2009). CESifo Working Paper Series No. 2574, KOF Working Paper No. 218, Available at SSRN: https://ssrn.com/abstract=1357244 or http://dx.doi.org/10.2139/ssrn.1357244

Silvia Marchesi (Contact Author)

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy
+39 02 64483057 (Phone)

HOME PAGE: http://https://sites.google.com/site/ssilviamarchesi/home

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

University of Milan - Centro Studi Luca d'Agliano (LdA)

Via P. Amedeo 34
Milano, Mi 20122
Italy

Laura Sabani

University of Florence ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

Axel Dreher

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117
Germany

HOME PAGE: http://www.axel-dreher.de

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