Can participation in IMF programs facilitate sovereign debt rescheduling? The role of program size
研究了IMF贷款规模与主权债务重组概率之间的倒U型关系，发现贷款过多会减少债务人和债权人重新谈判的激励，对政策制定者和投资者有参考价值。
• We investigate the effect of IMF loan size on the probability of sovereign debt restructuring. • We develop a simple theory explaining the incentive issues for debtors and creditors during sovereign debt restructuring. • We propose a new identification strategy to isolate the effect of IMF loan size. • We find an inverted U-shaped relationship between IMF loan size and the probability of sovereign debt rescheduling. We develop a theoretical model to explain the possible inverted U-shaped relationship between IMF loan size and the probability of sovereign debt rescheduling. Given that the IMF is a de facto senior creditor, borrowing too much from the IMF leaves a smaller total surplus for the debtor and creditor to share in the future; thus creditors and debtors have less incentive to renegotiate the debt. Empirically, we propose a new identification strategy to isolate the effect of IMF loan size. Our identification strategy is based on Bartik-style instrumental variables that combine changes in the IMF’s liquidity and the country’s historical average IMF loan size. Using panel data from 100 countries over the period between 1977 and 2020, we empirically demonstrate the inverted U-shaped relationship predicted by our theory. While our results confirm the positive role of IMF loans in resolving sovereign debt crises, we note that too much lending can lead to unintended adverse outcomes.