Resource title

A Model of the IMF as a Coinsurance Arrangement

Resource image

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Resource description

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.

Resource author

Ralph Chami, Sunil Sharma, Ilhyock Shim

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/17949

Resource license

Adapt according to the presented license agreement and reference the original author.