The International Monetary Fund: 70 Years of Reinvention

Reinhart, Carmen M. und Trebesch, Christoph (10. Dezember 2015): The International Monetary Fund: 70 Years of Reinvention. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2015-19

Abstract

A sketch of the International Monetary Fund’s 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a “demand driven” theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively “new” IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became they key focus since the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing nations and now migrated to advanced ones. As a consequence, the IMF has engaged in “serial lending”, with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency, most widespread among low income countries in chronic arrears to the official sector, but most evident in the case of Greece since 2010. We conclude that these practices impair the IMF’s role as an international lender of last resort.

• Dokumententyp: Paper
• Keywords: IMF, currency crashes, financial crises, sovereign default, lender of last resort, international borrowing
• Fakultät: Volkswirtschaft > Munich Discussion Papers in Economics
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: E5, F33, F4, F55, G01, G2, G15, N0
• Sprache: Englisch

Literaturliste

Arslanalp, Serkan and Takahiro Tsuda. 2014. “Tracking Global Demand for Advanced Economy Sovereign Debt.” IMF Economic Review, 62(3), pp. 430-464. Bank of International Settlements. 2014. Re-Thinking the Lender of Last Resort. BIS Papers No 79. Barro, Robert J. and Jong-Wha Lee. 2005.”IMF Programs: Who is Chosen and What are the Effects?” Journal of Monetary Economics, 52(7), pp. 1245-1269.

Beers, David T. and Jean-Sébastien Nadeau. 2015. “Database of Sovereign Defaults. ” Bank of Canada Technical Report No. 101.

Behrman, Greg. 2007. “The Most Noble Adventure: The Marshall Plan and the Reconstruction of Post- War Europe .” London: Aurum Press Ltd.

Board of Governors of the Federal Reserve System. 2015. “The Federal Reserve Discount Window.” https://www.frbdiscountwindow.org/

Bordo, Michael D. and Harold James. 2000. “The International Monetary Fund: Its Present Role in Historical Perspective.” NBER No. w7724.

Boughton, James M. 2001. “Silent Revolution: The International Monetary Fund, 1979-89.” Washington D.C.: IMF Press.

Boughton, James M. 2012. Tearing Down Walls: The International Monetary Fund 1990-1999. Washington D.C.: IMF Press.

Boughton, James M. and Sarwar Lateef, 1995. Fifty Years After Bretton Woods: The Future of IMF and the World Bank, IMF Press.

Bulow, Jeremy and Kenneth Rogoff. 1990. “Cleaning Up Third World Debt Without Getting Taken to the Cleaners.” The Journal of Economic Perspectives, 4(1), pp. 31-42.

Bulow, Jeremy, and Kenneth Rogoff. 2005. “Grants versus loans for development banks.” American Economic Review 95(2), pp. 393-397.

Bird, Graham, Mumtaz Hussain, and Joseph P. Joyce. 2004. “Many Happy Returns? Recidivism andthe IMF.” Journal of International Money and Finance, 23(2), pp. 231–251.

Calomiris, Charles W. and Allan H. Meltzer. 1999. "Reforming the IMF." Unpublished, New York: Columbia Business School.

Calvo, Guillermo A. 2006. “Monetary Policy Challenges in Emerging Markets: Sudden Stop, Liability Dollarization, and Lender of Last Resort” NBER No. w12788.

Cerra, Valerie and Sweta Chaman Saxena. 2008. “Growth Dynamics: The Myth of Economic Recovery.” American Economic Review, 98(1), pp. 439-457.

Claessens, Stijn M.,Kose, Ayhan and Marco E. Terrones. 2009. “What Happens During Recessions, Crunches and Busts?” Economic Policy, 24(60), pp. 653-700.

Cooper, Richard, 1971, “Currency Devaluation in Developing Countries,” Essays in International Finance no. 86, June, Princeton University.

Cruces, Juan J. and Christoph Trebesch. 2013. "Sovereign Defaults: The Price of Haircuts.” American Economic Journal: Macroeconomics, 5(3), pp. 85-117.

Dell'Ariccia, Giovanni, Detragiache, Enrica, and Raghuram Rajan. 2008. “The Real Effect of Banking Crises.” Journal of Financial Intermediation, 17(1), pp. 89-112.

De Vries, Margaret Garritsen, 1976. The International Monetary Fund, 1966-1971: Narrative. Vol. 1. International Monetary Fund.

Díaz-Alejandro, Carlos F. 1983. “Stories of the 1930s for the 1980s” In Financial Policies and the World Capital Market: The Problem of Latin American Countries, Chicago edited by Pedro A. Armella, Rudiger Dornbusch, and Maurice Obstfeld, Chap. 1. University of Chicago Press.

Díaz-Alejandro, Carlos F. 1984. “Latin American Debt: I Don’t Think We Are in Kansas Anymore.” Brookings Papers on Economic Activity, 2, pp. 335–403.

Diaz-Cassou, J., Erce, A., and J. Vazquez-Zamora (2008), “The Role of the IMF in Sovereign Debt Restructurings: Implications for the Lending Into Arrears Policy.” Bank of Spain Working Paper 805.

Dreher, Axel and Nathan Jensen. 2007. “Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions.” Journal of Law & Economics, 50(1), pp. 105-124.

Dreher, Axel, Sturm, Jan-Egbert and James Raymond Vreeland. 2009. “Global Horse Trading: IMF Loans for Votes in the United Nations Security Council,” European Economic Review, 53(7), pp.742-757.

Economist. 2008. “The IMF Downsizes: It's Mostly Firing.” February 7.

Economist. 2009. “The IMF: Battling Stigma. The IMF is in Search of a Role, and a Happier Reputation”, March 26.

Edwards, Sebastian. 1989. “The International Monetary Fund and the Developing Countries: A Critical Evaluation.” Carnegie-Rochester Conference Series on Public Policy, 31, pp. 7-68.

Eichengreen, Barry. 1992. Golden Fetters: The Gold Standard and the Great Depression 1919-1939, Oxford University Press.

Erce, Aitor. 2013. “Sovereign Debt Restructurings and the IMF: Implications for Future Official Interventions.” Federal Reserve Bank of Dallas Working Paper No. 143. European Central Bank. 2015. “ELA Procedures.” Feldstein, Martin. 1998. “Refocusing the IMF.” Foreign Affairs, 77(2), pp. 20-33.

Fischer, Stanley.1999 “On the Need for An International Lender of Last Resort.” Journal of Economic Perspectives, 13(4), pp. 85-104.

Gold, Joseph. 1970. “Stand-by arrangements of the International Monetary Fund.” Washington D.C.: International Monetary Fund.

Gourinchas, Pierre-Olivier and Maurice Obstfeld. 2012. “Stories of the Twentieth Century for the Twenty-First.” American Economic Journal: Macroeconomics, 4(1), pp. 226–65.

Horsefield, John Keith, and Margaret Garritsen De Vries, eds, 1969. The International Monetary Fund, 1945-1965: Twenty Years of International Monetary Cooperation. Vol. 1.

International Monetary Fund. 1999. “The IMF's Enhanced Structural Adjustment Facility (ESAF): Is It Working?” September, https://www.imf.org/external/pubs/ft/esaf/exr/.

International Monetary Fund. 2002. “Evaluation of Prolonged Use of IMF Resources.” Internal Evaluation Office.

International Monetary Fund. 2013. “Greece: Ex Post Evaluation of Exceptional Access under the 2010 Stand-By Arrangement.” IMF Country Report No. 13/156.

International Monetary Fund. 2014. “The Fund’s Lending Framework and Sovereign Debt – Preliminary Considerations.” Washington D.C.: IMF

International Monetary Fund. World Economic Outlook, various issues.

Ilzeztki, Ethan, Carmen M. Reinhart and Kenneth Rogoff. 2016. "Exchange Rate Arrangements Entering the 21st Century: Which Anchor Will Hold?" Harvard University, mimeo.

Jordà, Òscar, Moritz Schularick and Alan M. Taylor. 2013. “When Credit Bites Back.” Journal of Money, Credit, and Banking, 45(2), pp. 3-28.

Joyce, Joseph. 2005. “Time Past and Time Present: a Duration Analysis of IMF Program Spells.” Review of International Economics, 13(2), pp. 283–297.

Kaminsky, Graciela L., and Carmen M. Reinhart, 1999. “The Twin Crises: the Causes of Banking and Balance-of-Payments Problems.” American Economic Review, 89, pp. 473-500.

Killick, Tony, 1995. “IMF Programmes in Developing Countries: Design and Impact.” New York: Routledge.

Krueger, Anne O. 1978. Liberalization Attempts and Consequences. NBER Books, Cambridge, MA: National Bureau of Economic Research.

Krueger, Anne O. 1998. “Whither the World Bank and the IMF?” Journal of Economic Literature, 36, No. 4, pp. 1983-2020.

Kindleberger, Charles P. 1978. “Manias, Panics and Crashes: A History of Financial Crises.” New York: Wiley.

Levy-Yeyati, Eduardo Levy, and Federico Sturzenegger. 2007. “Fear of Appreciation.” World Bank Policy Research Working Paper Series, No. 4387.

Mody, Ashoka, and Diego Saravia. 2006. “Catalysing Private Capital Flows: Do IMF Programmes Work as Commitment Devices?” Economic Journal, 116(513), pp. 843-867.

Mody, Ashoka. 2015. “In Bad Faith.” Bruegel Blog Post, July 3rd.

Moreno, Pablo. 2013. “The Metanorphosis of the IMF (2009-2011).” Bank of Spain Working Paper 78.

Nowzad, Bahram, 1981. “The IMF and Its Critics,” Princeton Essays in International Finance Number 146, December.

Obstfeld, Maurice, and Alan M. Taylor. 2004. “Global Capital Markets: Integration, Crisis, and Growth.” Japan-U.S. Center Sanwa Monographs on International Financial Markets, Cambridge: Cambridge University Press.

Reinhart, Carmen M. and Kenneth S. Rogoff. 2009. “This Time Is Different: Eight Centuries of Financial Folly.” Princeton: Princeton University Press.

Reinhart, Carmen M. and M. Belen Sbrancia. 2015. “The Liquidation of Government Debt.” Economic Policy, 30(82), pp. 291-333.

Reinhart, Carmen M. and Vincent R. Reinhart. 2010. “After the Fall.” in Proceedings, Federal Reserve Bank of Kansas City Economic Policy Symposium, Macroeconomic Challenges: The Decade Ahead, 2010, pp. 17-60.

Reinhart, Carmen M. and Vincent R. Reinhart. 2015. “Financial Crises, Development, and Growth: A Long-term Perspective.” World Bank Economic Review, 29 (1), pp. 1-24.

Reinhart, Carmen M. and Christoph Trebesch. 2015. “Sovereign Debt Relief and its Aftermath.” Forthcoming, Journal of the European Economic Association.

Rose, Andrew K. 2005. "One Reason Countries Pay Their Debts: Renegotiation and International Trade," Journal of Development Economics, 77 (1)), pp. 189-206.

Sachs, Jeffrey. 1998. “The IMF and the Asian Flu.” The American Prospect no. 37.

Schadler, Susan. 2013. “Unsustainable Debt and the Political Economy of Lending: Constraining the IMF’s role in Sovereign Debt Crises”, CIGI Paper No 19.

Schadler, Susan. 2014. “The IMF’s Preferred Creditor Status: Does it still Make Sense after the Euro Crisis?” CIGI Paper No 37.

Schlegl, Matthias, Trebesch, Christoph, and Mark. L.J. Wright 2015. “The Seniority Structure of Sovereign Debt.” unpublished paper. Subramanian, Arvind. 2015. “How The IMF Failed Greece.” Project Syndicate Column, August 13. Standard and Poor’s. 2015. Default, Transition, and Recovery: 2014 Annual Sovereign Default Study and Rating Transitions. New York: Mc Graw Hill.

Stone, Randall W. 2004. “The Political Economy of IMF Lending in Africa.” American Political Science Review, 98(4), pp. 577-591.

Thacker, Strom C. 1999. “The High Politics of IMF Lending.” World Politics, 52, pp. 38–75. World Bank. 2015. “International Debt Statistics”, Washington DC: The World Bank.