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The Currency of ConfidenceHow Economic Beliefs Shape the IMF’s Relationship with Its Borrowers$
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Stephen C. Nelson

Print publication date: 2017

Print ISBN-13: 9781501705120

Published to Cornell Scholarship Online: September 2017

DOI: 10.7591/cornell/9781501705120.001.0001

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Quantitative Evidence Linking Shared Economic Beliefs to Variation in IMF Treatment

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The Currency of Confidence

Stephen C. Nelson

Cornell University Press

This chapter examines quantitative evidence linking shared economic beliefs to variation in the International Monetary Fund's (IMF) treatment of borrowers. It first discusses the measures of IMF treatment before turning to the (indirect) indicators of policymakers' economic beliefs that are then used to construct the key variable in the analysis: the ideational distance between the IMF and the borrowing country. It also evaluates data related to the generosity, conditionality, and enforcement of nearly 500 IMF programs signed in the 1980s and 1990s. The goal is to determine whether borrowing governments with policymakers who shared beliefs with the IMF received bigger loans, fewer conditions, and easier enforcement of the conditions. The results of quantitative analysis show that there is a pattern of favoritism in a large sample of the Fund programs.

Keywords:   shared economic beliefs, International Monetary Fund, enforcement, generosity, conditionality, borrowing governments, loans, quantitative analysis, favoritism, treatment of borrowers

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