Imf Conditionality and Program Ownership: A Case for Streamlined Conditionality
May 1, 2003
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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.
Subject: Discount rates, Financial services
Keywords: ambiguity, compound program, compound prospect, Discount rates, economic value, explicit option value, Global, IMF program, program condition, program conditionality and ownership, program ownership, program sponsor, Southeast Asia, structural adjustment, uncertainty, WP
Pages:
18
Volume:
2003
DOI:
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Issue:
098
Series:
Working Paper No. 2003/098
Stock No:
WPIEA0982003
ISBN:
9781451852165
ISSN:
1018-5941
