A Model of the IMF as a Coinsurance Arrangement

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.

• Publication year

  2004

• Venue

  Social Science Research Network

• Publication date

  2004-11-01

• Fields of study

  Economics

• Identifiers
  DOI 10.5018/ECONOMICS-EJOURNAL.JA.2008-14
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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