European Parliament Library

A Model of the Imf As a Coinsurance Arrangement, Ralph Chami, Ilhyock Shim, Sunil Sharma

Abstract
The paper shows that a coinsurance arrangement among countries can, in principle, play a useful role in helping countries bear the risks involved in developing their economies and integrating into the global financial system. The operation of the coinsurance arrangement is examined under different loan contracts offered by the IMF. The analysis suggests 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-induce higher effort by member countries to avoid and overcome crises-than an ex-post loan contract. Such ex ante contracts highlight the need for precommitment to contend with the Samaritan’s dilemma and time inconsistency. The paper also shows that state-contingent repayment schemes are needed to deal with King Lear's dilemma
Table Of Contents
""Contents""; ""I. Introduction""; ""II. A Model of Coinsurance""; ""A. Exogenous Risk Case: No Moral Hazard""; ""B. Endogenous Risk Case: Moral Hazard""; ""C. Interdependence and Coinsurance: Asymmetry Matters""; ""D. Moral Hazard in Coinsurance Arrangements""; ""III. Operating the Coinsurance Arrangement""; ""A. A Model of IMF Lending""; ""B. The IMF�s Objective Function""; ""C. Policy Strategy for the Country""; ""D. The IMF�s Choice of the Lending Contract""; ""E. Timing of Loan Contracts""; ""F. Precommitment and Time-consistency""; ""IV. Concluding Remarks""; ""Appendix: Proofs""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (45 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781451919806

Library Locations

  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
    Borrow
  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
    Borrow
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR
    Borrow