Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law

Nelson, Stephen C.

doi:10.1007/s11558-010-9080-7

Cited by 10 publications

(8 citation statements)

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“…This suggests another issue, which was pointed out by an anonymous reviewer: if it is easy to jettison members of the policy team, should not the IMF discount the degree of ideational proximity by the likelihood of survival? Aside from the limits of the IMF's ability to forecast the political fortunes of the policy team with which it has been negotiating, the evidence in Nelson 2009 shows that neoliberal officials' Second, if neoliberal policy-makers are ex ante signaling devices that help the IMF mitigate uncertainty associated with the government's intentions, then one should observe that the likelihood of obtaining a waiver decreases as the proportion of neoliberals in government increases. 118 The logic follows Tomz's discussion of sovereign lending: borrowers that are reputed to be "stalwarts" (unlikely cases for debt repudiation) will be punished by investors for failure to repay regardless of the circumstances under which noncompliance occurred.…”

Section: Alternative Explanationsmentioning

confidence: 99%

Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

Nelson¹

2014

Int Org

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130

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International organizations (IOs) suffuse world politics, but the International Monetary Fund (IMF) stands out as an unusually important IO. My research suggests that IMF lending is systematically biased. Preferential treatment is largely driven by the degree of similarity between beliefs held by IMF officials and key economic policy-makers in the borrowing country. This article describes the IMF's ideational culture as “neoliberal,” and assumes it to be stable during the observation window (1980–2000). The beliefs of top economic policy-makers in borrowing countries, however, vary in terms of their distance from IMF officials' beliefs. When fellow neoliberals control the top economic policy posts the distance between the means of the policy team's beliefs and the IMF narrows; consequently, IMF loans become less onerous, more generous, and less rigorously enforced. I gathered data on the number of conditions and the relative size of loans for 486 programs in the years between 1980 and 2000. I collected data on waivers, which allow countries that have missed binding conditions to continue to access funds, as an indicator for enforcement. I rely on indirect indicators, gleaned from a new data set that contains biographical details of more than 2,000 policy-makers in ninety developing countries, to construct a measure of the proportion of the top policy officials that are fellow neoliberals. The evidence from a battery of statistical tests reveals that as the proportion of neoliberals in the borrowing government increases, IMF deals get comparatively sweeter.

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Section: Alternative Explanationsmentioning

confidence: 99%

Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

Nelson¹

2014

Int Org

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130

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“…The IMF and the World Bank are the products of the plan, spearheaded by American and British officials, for a more open international economic system in the wake of World War II. One of the obligations of IMF membership, built into the institution's Articles of Agreement, is the removal of current account restrictions (Broome 2010;Nelson 2010;Simmons 2000). By encouraging international trade in goods and (increasingly) services, the IMF created the demand for the thing that it supplied-resources to help states with balance of payments problems adjust without resort to exchange restrictions.…”

Section: The Evolution Of the Ifis' Approaches To Conditional Lendingmentioning

confidence: 99%

International Financial Institutions and Market Liberalization in the Developing World

Nelson

2016

The Oxford Handbook of the Politics of Development

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This article examines the role played by the two most important international financial institutions (IFIs), the World Bank and the International Monetary Fund (IMF), in the developing countries’ transition towards market liberalization and openness. More specifically, it considers whether IFIs are powerful “globalizers” of the developing world or ineffective organizations whose grand plans are forever thwarted by savvy governments promising sweeping reforms that never materialize. Drawing on the findings from thirty-one recent empirical studies, it concludes that there is no clear evidence that the IFIs’ conditional lending has significant effects on structural reforms in developing countries. Nevertheless, the chapter argues that we should not regard the IFIs as completely useless agents in the effort to remake developing countries’ economies over the past thirty years, suggesting that their indirect effects on liberalizing policy reforms may be more important than the direct effects.

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“…Yet there is reason to believe that compliance matters (cf. Nelson ), particularly as non‐compliance is endemic. Recent estimates of 11 EU Member States from 1990–2014 suggest that countries tend to comply with their fiscal rules only in about 50 per cent of the years (Reuter ).…”

Section: Measuring Fiscal Rulesmentioning

confidence: 99%

Fiscal rules, fiscal outcomes and financial market behaviour

Rommerskirchen

2015

European J Political Res

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Since the outbreak of the eurozone's sovereign debt crisis, a range of fiscal policy measures have been adopted at the European Union (EU) and national levels that have given rise to claims of a significant reinforcement of fiscal policy constraint. Given the prominence and reinvigorated political appeal of fiscal rules in the EU and beyond, it is disconcerting how little we actually know about the link between fiscal rules, budgetary outcomes and market behaviour. In this research note, the aim is to take stock of the existing literature and challenge its contribution to the current policy debate on the merits of fiscal rules. Specifically it will focus on problems linked to endogeneity, measurements and contextuality.

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Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law

Abstract: Compliance with international law, Sovereign risk, The International Monetary Fund, JEL Codes, F33, F53, F55, F59, G24,

Cited by 10 publications

References 57 publications

Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

International Financial Institutions and Market Liberalization in the Developing World

Fiscal rules, fiscal outcomes and financial market behaviour

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