Ralph Chami, Sunil Sharma, Ilhyock Shim

A Model of the IMF as a Coinsurance Arrangement

July 09, 2007

Abstract

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. 

Paper submitted to the special issue "Recent Developments in International Money and Finance" edited by Ronald MacDonald

Citation

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Comments and Questions

Referee Report - Anonymous - September 27, 2007 - 10:16

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Reply to Referee Report - Ilhyock Shim - December 05, 2007 - 11:09

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Referee Report - Anonymous - October 08, 2007 - 11:09

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Reply to Referee Report - Ilhyock Shim - December 05, 2007 - 11:10

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