Read my lips: the role of information transmission in multilateral reform design

Silvia Marchesi, Laura Sabani and Axel Dreher

No 4, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: We focus on the role that the transmission of information between a multilateral (e.g., the IMF) and a country has for optimal (conditional) reform design. The main result is that the informational advantage of the country must be strictly greater than the advantage of the multilateral in order to increase a country’s discretion in the choice of the policies to be implemented (country ownership). To the contrary, an increase in the conflict of interests between the multilateral and the country may lead the multilateral to leave more freedom in designing reforms, which is at odds to what is commonly argued. Our empirical results provide support to the idea that the IMF follows an optimal allocation rule of control rights over policies, leaving the recipient countries more freedom whenever their local knowledge appears to be crucial for designing more adequate reforms.

Keywords: IMF conditionality; delegation; communication; ownership; panel data (search for similar items in EconPapers)
JEL-codes: C23 D82 F33 N2 (search for similar items in EconPapers)
Date: 2009-07-15
New Economics Papers: this item is included in nep-cta
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Related works:
Journal Article: Read my lips: The role of information transmission in multilateral reform design (2011)
Working Paper: Read my Lips: the Role of Information Transmission in multilateral reform design (2009)
Working Paper: Read my lips: The role of information transmission in multilateral reform design (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:got:gotcrc:004

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