Imf Conditionality and Program Ownership: A Case for Streamlined Conditionality

Author/Editor:

S. Nuri Erbas

Publication Date:

May 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Program conditionality and ownership are important considerations in the IMF's current rethinking of program design. This paper contributes to the literature by developing a theory of program conditionality and ownership on the basis of Cumulative Prospect Theory. The policymaker may value a set of programs, each with fewer conditions, more than an extended program with as many conditions. This valuation bias is greater in ambiguity (Knightian uncertainty) than under uncertainty. If greater valuation of a program engenders more explicit and implicit ownership, then programs with fewer conditions may have a better chance of success. Less is more.

Series:

Working Paper No. 2003/098

Subject:

Discount rates Financial services

English

Publication Date:

May 1, 2003

ISBN/ISSN:

9781451852165/1018-5941

Stock No:

WPIEA0982003

Pages:

18

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