"The silent revolution": how the staff exercise informal governance over IMF lending

his paper examines how the staff exercise informal governance over lending decisions of the International Monetary Fund (IMF or Fund). The essential component of designing any IMF program, assessing the extent to which a borrowing country is likely to fulfill its policy commitments, is based partly on informal staff judgments subject to informal incentives and normative orientations not dictated by formal rules and procedures. Moreover, when country officials are unable to commit to policy goals of the IMF, the IMF staff may bypass the formal channel of policy dialogue through informal contacts and negotiations with more like-minded actors outside the policymaking process. Exercising informal governance in these ways, the staff are motived by informal career advancement incentives and normative orientations associated with the organization’s culture to provide favorable treatment to borrowers composed of policy teams sympathetic toward their policy goals. The presence of these sympathetic interlocutors provides the staff both with greater confidence a lending program will achieve success and an opportunity to support officials who share their policy beliefs. I assess these arguments using a new dataset that proxies shared policy beliefs based on the professional characteristics of IMF staff and developing country officials. The evidence supports these arguments: larger loan commitments are extended to countries where government officials and the Fund staff share similar professional training. The analysis implies informal governance operates in IOs not just via state influence but also through the evolving makeup, incentive structure, and normative orientations of their staffs

Professional ties that bind: how normative orientations shape IMF conditionality

Staff play a key part in designing IMF conditionality, and yet the literature provides a narrow view of their motivations. This article shows how the design of IMF conditionality is linked to the normative orientations of the staff and their common professional training. Professional ties from similar training help to bind the staff together around a shared set of normative orientations that inform the IMF's policy goals. When borrowing-country officials do not share these orientations, the staff are motivated to tighten conditionality. This behaviour also fits with staff concerns about time-inconsistency and moral hazard. I find robust statistical support for this argument using a dataset based on the professional ties that exist between the IMF staff and borrowing-country officials. Yet conditionality is not found to be more lenient when country officials share the normative orientations of the IMF staff. Staff concerns about time-inconsistent preferences and moral hazard likely weigh against more lenient treatment where normative adherence is stronger

Antisymmetry and channel coupling contributions to the absorption for p + alpha/d + 3He

To understand recently established empirical p + alpha potentials, RGM calculations followed by inversion are made to study contributions of the d + 3He reaction channels and deuteron distortion effects to the p + alpha potential. An equivalent study of the d + 3He potential is also presented. The contributions of exchange non-locality to the absorption are simulated by including an phenomenological imaginary potential in the RGM. These effects alone strongly influence the shape of the imaginary potentials for both p + alpha and d + 3He. The potentials local-equivalent to the fully antisymmetrised-coupled channels calculations have a significant parity-dependence in both real and imaginary components, which for p + alpha is qualitatively similar to that found empirically. The effects on the potentials of the further inclusion of deuteron distortion are also presented. The inclusion of a spin-orbit term in the RGM, adds additional terms to the phase-equivalent potential, most notably the comparatively large imaginary spin-orbit term found empirically.Comment: 17 pages, Latex, 8 postscript figs, submitted to Nucl. Phys.

Do international non-governmental organizations inhibit globalization? the case of capital account liberalization in developing countries

Why do countries liberalize capital controls? The literature identifies a range of possible reasons. Yet despite considerable advances, the impact of international non-governmental organizations (INGOs) has yet to be considered. In fact, surprisingly, systematic analysis of the role of INGOs in the diffusion of economic openness, financial or otherwise, has not been pursued previously. We offer the first such analysis by advancing the idea of “climatic mimesis,” which refers to the cultural climate for policymaking that results from country ties to INGO. INGOs shape capital account regulation by altering the cultural climate in a country such that liberalization becomes a more problematic policy choice. Our statistical analysis of data from developing countries reveals that INGO-ties inhibited liberalization as did relatively high public debt and concentrated domestic banking sectors. The presence of an IMF program and liberalization by economic competitors encouraged it. We suggest these findings have important implications for understanding the potential for convergence and divergence in an era of globalization

Networked default: public debt, trade embeddedness, and partisan survival in democracies since 1870

Sovereign default is often associated with the downfall of incumbent governments in democratic polities. Existing scholarship directs attention to the relationship between default and domestic politics and institutions rather than the broader international environment wherein repayment and default take place. We explore the possibility that the impact of a country’s decision to default on partisan survival will also be shaped by the prevalence of default amongst its peers in its local network. Illustrating this line of reasoning with international trade, our results support the argument that given networked default, voters see national default as a lost strategic opportunity to elevate a country’s reputation and are more inclined to punish incumbent regimes who fail to repay. These results are inconsistent with an alternative possibility — that networked default might contribute to the decay of a repayment norm and thus provide a justifiable “excuse” for default at home. Furthermore, our results are robust to alternative measures of regime governance and entropy balancing in light of systematic differences between defaulting and non-defaulting regimes. Overall, our findings point to the political interdependence of default and repayment and the need for political scientists to take greater account of network effects in analyzing the consequences of economic misbehavior

Great expectations, veto players, and the changing politics of banking crises

How have the politics of banking crises changed over the long run? Unlike existing static accounts, we offer a dynamic theory emphasizing how the emergence of voters’ “great expectations” after the 1930s concerning crisis prevention and mitigation reshaped the politics of banking crises in many democratic countries. We argue that both variations over time, centred on the emergence of these expectations, and variations within democratic countries, based on how veto players constrain policy change, exerted an important influence on the propensity of voters to punish incumbent political parties in the aftermath of banking crises. We find strong support for our argument using a new dataset of 100 democratic countries from 1831 – 2011. Political punishment in the aftermath of a banking crisis is mainly a modern phenomenon and is most evident in systems with polarized veto players

Austerity versus stimulus? Understanding fiscal policy change at the International Monetary Fund since the Great Recession

This repository item contains a working paper from the Boston University Global Economic Governance Initiative. The Global Economic Governance Initiative (GEGI) is a research program of the Center for Finance, Law & Policy, the Frederick S. Pardee Center for the Study of the Longer-Range Future, and the Frederick S. Pardee School of Global Studies. It was founded in 2008 to advance policy-relevant knowledge about governance for financial stability, human development, and the environment.Since 2008 the IMF has become more open to the use of discretionary fiscal stimulus packages to deal with recessions, while changing its doctrine on the timing and content of fiscal consolidation. Rather than constitute a paradigm shift, these changes amounted only to a careful recalibration of its pre-crisis fiscal orthodoxy. The paper traces this evolution of the Fund’s doctrine to staff politics, more diverse thinking in mainstream economics and a careful framing of the message through the use of mainstream macroeconomic models. The findings contribute to the emerging debate on the internal sources of intellectual and policy change in international economic organizations

Leaving the nest: the rise of regional financial arrangements and the future of global governance

This article examines the impact of regional financial arrangements (RFAs) on the global liquidity regime. It argues that the design of RFAs could potentially alter the global regime, whether by strengthening it and making it more coherent or by decentring the International Monetary Fund (IMF) and destabilizing it. To determine possible outcomes, this analysis deploys a ‘middle‐up’ approach that focuses on the institutional design of these RFAs. It first draws on the rational design of institutions framework to identify the internal characteristics of RFAs that are most relevant to their capabilities and capacities. It then applies these insights to the interactions of RFAs with the IMF, building on Aggarwal's (1998) concept of ‘nested’ versus ‘parallel’ institutions, to create an analytical lens through which to assess the nature and sustainability of nested linkages. Through an analysis of the Chiang Mai Initiative Multilateralization (CMIM) and the Latin American Reserve Fund (FLAR), the article demonstrates the usefulness of this lens. It concludes by considering three circumstances in which fault lines created by these RFAs’ institutional design could be activated, permitting an institution to ‘leave the nest’, including changing intentions of principals, creation of parallel capabilities and facilities, and failure of the global regime to address regional needs in a crisis.The authors would like to thank Veronica Artola, Masatsugu Asakawa, Ana Maria Carrasquilla, Junhong Chang, Paolo Hernando, Hoe Ee Khor, Kazunori Koike, Jae Young Lee, Ser-Jin Lee, Guillermo Perry, Yoichi Nemoto, Freddy Trujillo, Masaaki Watanabe, Yasuto Watanabe, Akihiko Yoshida, and others who wished to remain anonymous, for their generosity in providing in-person interviews. Further, the authors would like to thank various central bank and ministry of finance officials of both FLAR and CMIM member countries. We also thank Jose Antonio Ocampo, Diana Barrowclough, and participants in the 'Beyond Bretton Woods' Workshop at Boston University (where an earlier version of this article was presented in September 2017) for their feedback on our broader research projects on RFAs. Last but not least, the authors wish to thank the anonymous referees for their constructive comments. This work builds upon previous work funded by UNCTAD and the Global Economic Governance Initiative at the Global Development Policy Center at Boston University. (UNCTAD; Global Economic Governance Initiative at the Global Development Policy Center at Boston University)Accepted manuscrip

The politics of IMF–EU cooperation : institutional change from the Maastricht Treaty to the launch of the Euro

How do regional changes affect the process of global governance? This article addresses this question by examining how the International Monetary Fund (IMF) responded to the challenges presented by Economic and Monetary Union (EMU) between the signing of the Maastricht Treaty in 1992 and the launch of the euro in 1999. Based on primary research from the IMF archives, the article illustrates how the IMF's efforts to reconfigure its relationship with European institutions evolved gradually through a logic of incremental change, despite initial opposition from member states. The article concludes that bureaucratic actors within international organizations will take advantage of informal avenues for promoting a new agenda when this fits with shared conceptions of an organization's mandate. The exercise of informal influence by advocates for change within an international organization can limit the options available to states in formal decision-making processes, even when these options cut across state preferences