Liquidity protection versus Moral Hazard: the role of the IMF

This paper develops a simple game between the IMF a county and a set of atomistic private investors. The model is motivated by the case of Argentina. Under reasonable assumptions, the one shot game has no Nash equilibrium in pure strategies. Consider- ing an equilibrium in mixed strategies, conditio...

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Detalles Bibliográficos
Autores principales: Powell, Andrew, Arozamena, Leandro
Formato: Documento de trabajo acceptedVersion
Publicado: Universidad Torcuato Di Tella. Escuela de Negocios. Centro de Investigaciones en Finanzas (CIF) 2017
Materias:
FMI
Mercado financiero internacional
Acceso en línea:http://repositorio.utdt.edu/handle/utdt/6262
Aporte de:
Repositorio Digital Universidad Torcuato Di Tella de Universidad Torcuato Di Tella
id I57-R16320.500.13098-6262
record_format dspace
institution Universidad Torcuato Di Tella
institution_str I-57
repository_str R-163
collection Repositorio Digital Universidad Torcuato Di Tella
topic FMI
Mercado financiero internacional
spellingShingle FMI
Mercado financiero internacional
Powell, Andrew
Arozamena, Leandro
Liquidity protection versus Moral Hazard: the role of the IMF
description This paper develops a simple game between the IMF a county and a set of atomistic private investors. The model is motivated by the case of Argentina. Under reasonable assumptions, the one shot game has no Nash equilibrium in pure strategies. Consider- ing an equilibrium in mixed strategies, conditions are derived on whether the IMF should exist. A “cooperative first best” may be supported in a repeated game by a “minimum punishment strat- egy” that may be optimal but may break down if the probability of insolvency rises. This implies that countries are likely to de- viate in bad times placing the IMF in an “impossible position”. It is suggested that the international financial architecture (IFA) remains incomplete.
format Documento de trabajo
acceptedVersion
author Powell, Andrew
Arozamena, Leandro
author_facet Powell, Andrew
Arozamena, Leandro
author_sort Powell, Andrew
title Liquidity protection versus Moral Hazard: the role of the IMF
title_short Liquidity protection versus Moral Hazard: the role of the IMF
title_full Liquidity protection versus Moral Hazard: the role of the IMF
title_fullStr Liquidity protection versus Moral Hazard: the role of the IMF
title_full_unstemmed Liquidity protection versus Moral Hazard: the role of the IMF
title_sort liquidity protection versus moral hazard: the role of the imf
publisher Universidad Torcuato Di Tella. Escuela de Negocios. Centro de Investigaciones en Finanzas (CIF)
publishDate 2017
url http://repositorio.utdt.edu/handle/utdt/6262
work_keys_str_mv AT powellandrew liquidityprotectionversusmoralhazardtheroleoftheimf
AT arozamenaleandro liquidityprotectionversusmoralhazardtheroleoftheimf
bdutipo_str Repositorios
_version_ 1764820543065817088

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