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IMF Conditionality and the Intertemporal Allocation of Resources

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  • Hassan Naqvi

Abstract

This article analyzes the impact of IMF (International Monetary Fund) conditionality on the intertemporal allocation of resources in an emerging market economy. The study identifies a principal-agent problem between the government of the emerging market and its citizens and shows that conditionality has the potential to mitigate the resulting misallocation of resources. Nevertheless, the analysis indicates that if IMF lending were influenced by geopolitical motives then the suboptimal allocation of resources would remain notwithstanding IMF conditionality.

Suggested Citation

  • Hassan Naqvi, 2014. "IMF Conditionality and the Intertemporal Allocation of Resources," International Review of Finance, International Review of Finance Ltd., vol. 14(2), pages 203-235, June.
    • Handle: RePEc:bla:irvfin:v:14:y:2014:i:2:p:203-235
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    File URL: http://hdl.handle.net/10.1111/irfi.12029
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