The IMF—A Reading List

Now that Dominique Strauss-Kahn has resigned as head of the International Monetary Fund, the debate has turned to who will lead the lending agency as it goes through its usual non-transparent and politicized selection process. (Of course, virtually all decisions at the IMF are politicized since it is primarily a political institution, a club in which rich countries’ governments with diverse interests and political priorities typically lend money to governments with track records of mismanaging their economies.)

The IMF is a fundamentally flawed institution, a problem independent of whether the new Fund chief is French or South African. Here’s a brief reading list for anybody more interested in the scandal of IMF lending than of the scandals of IMF personalities.

  • In this Cato Handbook essay I provide an overview of the IMF’s poor record at promoting growth or reform, and of the moral hazard of providing big bailouts to countries, beginning with Mexico in 1995.
  • In “The IMF’s Imprudent Role as Lender of Last Resort,” Charles Calomiris describes how IMF rescue packages undermine global financial stability.
  • In this Cato study, I review the evolution of the IMF, show that its lending tends to last for decades rather than be short term, and that it tends to slow rather than accelerate reforms. I argue for market solutions to debt crises.
  • In “International Financial Crises: Myths and Realities,” Anna Schwartz explains that financial contagion during the Asian financial crisis—a key justification for IMF intervention—was not occurring. Only countries with flawed economic policies suffered crises.
  • Here, Swami Aiyar argues that the IMF has no business lending to Greece.
  • In “Asian Problems and the IMF,” Allan Meltzer criticizes the Fund’s subsidization of risk.
  • Here Anna Schwartz takes on the Fund’s “dubious proposal” to turn itself into a sort of bankruptcy court for nations.
  • In this study Swami Aiyar takes on another bad idea: creating an IMF currency to rival the dollar.