A Model of the IMF as a Coinsurance Arrangement

Ralph Chami, Sunil Sharma () and Ilhyock Shim

No 2007-26, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The paper shows that an IMF-like coinsurance arrangement among countries can play a useful role in the global financial system. The operation of the coinsurance arrangement is examined under different loan contracts. It shows that, if the IMF´s objective is to safeguard its resources and be concerned about the welfare of the borrower, an ex ante loan contract is more likely to create the right incentives than an ex post loan contract. Such contracts highlight the need for precommitment to contend with the Samaritan´s dilemma and time inconsistency, and state-contingent repayment schemes to deal with King Lear´s dilemma.

Keywords: IMF; coinsurance arrangement; moral hazard; Samaritan´s dilemma; King Lear´s dilemma (search for similar items in EconPapers)
JEL-codes: D82 F02 F33 G22 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.economics-ejournal.org/economics/discussionpapers/2007-26
https://www.econstor.eu/bitstream/10419/17949/1/dp2007-26.pdf (application/pdf)

Related works:
Journal Article: A Model of the IMF as a Coinsurance Arrangement (2008)
Working Paper: A model of the IMF as a coinsurance arrangement (2005)
Working Paper: A Model of the Imf As a Coinsurance Arrangement (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:5731

Access Statistics for this paper

More papers in Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().