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| Author: | Powell, A. Arozamena, L. |
| Title: | Liquidity protection versus moral hazard: the role of the IMF |
| Journal: | Journal of International Money and Finance
2003 : DEC, VOL. 22:7, p. 1041-1063 |
| Index terms: | IMF Liquidity Moral hazard Argentina |
| Language: | eng |
| Abstract: | Recent crises including that in Argentina motivate a game between the IMF, a country and atomistic private investors. The one stage game has no Nash equilibrium in pure strategies. Considering 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 strategy" but breaks down as the probability of insolvency rises. |
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