Agency and communication in IMF conditional lending: theory and empirical evidence

• DOI: 10.3929/ethz-a-005778388
• Publication Date: 2009-03-08
• Authors: Silvia Marchesi; Laura Sabani; Axel Dreher
• Keywords: Openness to experience; Delegation; Empirical evidence

We focus on the role that transmission of information between a multilateral (the IMF) and country has for optimal design conditional reforms. Our model predicts when agency problems are especially severe, and/or IMF is valuable, centralized control indeed optimal. To contrary, local knowledge more important than bias we expect delegation to dominate. Controlling economic political factors, our empirical tests show number conditions lower in countries with greater social complexity, while it increases countries’ authorities, openness, transparency, consistently theory.