Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/17949 
Year of Publication: 
2007
Series/Report no.: 
Economics Discussion Papers No. 2007-26
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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.
Subjects: 
IMF
coinsurance arrangement
moral hazard
Samaritan´s dilemma
King Lear´s dilemma
JEL: 
G22
F02
D82
F33
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Working Paper

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