Monday, June 13, 2011

The IMF Is Political, Not Technocratic

. Monday, June 13, 2011


To spell it out, Egypt and Belarus are both looking for around US$3 billion. Egypt gets it with an explicit deferment of structural reforms as long as there is an “action plan.” Belarus will have to do reforms before there’s a loan. Does anyone else see a political version of moral hazard here?

For more on this dynamic, see this excellent book by Grigore Pop-Eleches. The "Arab Spring" may end up as an out-of-sample test of his central hypotheses. For the US's role in conditioning the IMF's behavior, see this by Thacker, this by Oatley/Yackee, and much of James Vreeland's career.

I don't have too much worry of a moral hazard here, since it didn't very well serve Mubarak's interests to hang on for the best possible IMF deal.


The IMF Is Political, Not Technocratic
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