Agency and communication problems in IMF conditional lending

Silvia Marchesi Marchesi () and Laura Sabani

No 139, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: The combination of special interest politics (agency problems) and informational asymmetries presents serious problems as the implementation of Fund conditionality is concerned. In this paper we focus on the role that the transmission of information between the IMF and the borrowing government has for the design of the most e??cient "incentive contract." Specifically, we find that when agency problems are especially severe, and/or IMF information is very valuable, a centralized control is indeed optimal (conventional conditionality). To the contrary, when local knowledge is more important than the agency bias we expect delegation (ownership) to be the optimal incentive scheme.

Keywords: IMF conditionality; delegation; communication (search for similar items in EconPapers)
JEL-codes: D82 F33 N2 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-06, Revised 2008-06
New Economics Papers: this item is included in nep-cta
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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:139

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