Hassan Naqvi

IMF Conditionality and the Intertemporal Allocation of Resources: IMF Conditionality

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.

IMF Conditionality and the Intertemporal Allocation of Resources

This article analyses the impact of IMF 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 will remain notwithstanding IMF conditionality.

Online Appendix of 'The Seeds of a Crisis: A Theory of Bank Liquidity and Risk-Taking Over the Business Cycle'

The appendix extends the banks objective function in the presence of fire-sale prices for assets liquidated prematurely. It also formalizes the cost of a bubble.