The IMF failure that wasn't: tournaments of conditionality and strategic ignorance during the european debt crisis

Pierre Penet

No unige:88327, Working Papers from University of Geneva, Paul Bairoch Institute of Economic History

Abstract: This article builds on ignorance studies to examine what went wrong in IMF expertise during the European debt crisis. A fundamental component of ignorance is concealing what you know. Ignorance is a strategic resource in ‘tournaments of conditionality,' when the setting of IMF conditionality is a conflicted exchange. This article covers IMF lending programs in Europe in 2008-2013 with a special focus on the first program for Greece. Empirical data is drawn from public sources made available at the start of each programs. I find that IMF ignorance resulted from a joint process of ‘private alteration' and ‘public obfuscation': the alteration of normal scenarios of debt sustainability in private expert negotiations worked in tandem with the obfuscation of doubts and risks in public stage. The key contribution of this article is to show that the ‘failure' of the IMF program for Greece can be reconceptualised as ‘success.' The immediate goal of the Greek program was to avoid the breakup of European monetary institutions. Another goal was the bailout of Greece's creditors. In this respect, the Greek program was a great success. But success came at a huge cost for EU authorities. The program was also a disaster for Greece's economy. This article claims that scholarly and popular interpretations of IMF program failures as epistemic hubris and complacency missed important problems and failed to identify the real culprits.

Keywords: IMF; Policy failure; Austerity; Eurozone debt crisis; Greece; Tournaments of conditionality (search for similar items in EconPapers)
JEL-codes: D7 D8 E5 F0 (search for similar items in EconPapers)
Pages: 33 p.
Date: 2016
New Economics Papers: this item is included in nep-mac
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