Certain governments have been faster than others in relaxing their restrictions on the cross-border movement of capital. How can we explain the timing and extent of financial liberalization across countries since the 1970s? We argue that IMF stabilization programs provide a window of opportunity for governments to initiate financial reforms, but that policy makers are more likely to seize this opportunity when welfare expenditures are high. Large loans from the IMF shield policy makers from the costs of financial reform, while welfare expenditures provide credibility to the government’s ex ante promises of compensation to individuals who are harmed by the reforms. We test this hypothesis on data for 87 countries from 1975 to 2002. We employ a spatial autoregressive error sample selection model which accounts for the nonrandom participation of countries in IMF programs as well as the processes of international policy diffusion. The results provide strong support for the interactive effect of IMF programs and domestic welfare expenditures on financial liberalization.
International Institutions and Domestic Compensation: The IMF and the Politics of Capital Account Liberalization
Related Resources
-
Abolishing Child Marriage in Indonesia’s Marriage Law through Feminist Legal Theory and Child’s Rights Approach
Sigiro, Atnike Nova. “Abolishing Child Marriage in Indonesia’s Marriage Law through Feminist Legal Theory and Child’s Rights Approach.” Jurnal Perempuan 25, no. 2 (2020): 117.
- Open Source Results
- Authors with Diverse Backgrounds
-
Gender-Based Violence AND 'Feminicide' in Queer Italian Movements: Questioning Gender, Sexuality, and The (Hetero) Normative Order
Peroni, Caterina. “Gender-Based Violence AND 'Feminicide' in Queer Italian Movements: Questioning Gender, Sexuality, and The (Hetero) Normative Order.” SSRN, January 6, 2016.
- Open Source Results
- Authors with Diverse Backgrounds