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The causes and consequences of IMF interventions in the Southern Cone.

Díaz-Cassou, Javier (2012) The causes and consequences of IMF interventions in the Southern Cone. PhD thesis, London School of Economics and Political Science.

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The International Monetary Fund has often been accused of adopting a one-size-fits-all approach to the resolution of financial crises. However, its programs present substantial differences in terms of their relative size and conditionality among other characteristics. This dissertation examines the causes and consequences of this variation through the lenses of two cases in which the contrast between the Fund´s interventions was particularly marked: Argentina and Uruguay during the period that surrounds the financial crash of 2001-02. The first part of this study analyses the determinants of these multilateral interventions through an adaptation of Robert Puntam´s two level games, exploring the way in which national politics interacted with international priorities to produce distinct outcomes in Argentina and Uruguay. The two experiences confirm that domestic ratification processes impose significant constraints on the negotiation of IMF programs, potentially conferring localized bargaining advantages to borrowing governments. Beyond a certain point, however, an intensification of these ratification constraints can result in a suspension of the Fund´s support, after which borrowers´ bargaining position weakens dramatically. That this point of rupture was reached in Argentina but not in Uruguay was due primarily to the different propensity to cooperate exhibited by political actors in these two countries, itself the product of certain institutional conditions such as the strength of their systems of checks and balances or a varying distribution of veto power. In turn, the second part of this thesis applies a hypothetical counterfactual approach to assess the consequences of the multilateral decisions adopted during the 2001-02 crisis in the Southern Cone. Although the contrast between the suspension of the Argentine program in December 2001 and the Uruguayan bailout of August 2002 had surprisingly modest macroeconomic consequences, its impact on politics and institutions was profound both in the short and in the medium-term. As a result of these findings, this dissertation argues that a better understanding of the implications of multilateral crisis resolution loans on the political economy of the countries concerned is still needed.

Item Type: Thesis (PhD)
Additional Information: © 2012 Javier Díaz-Cassou
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
Sets: Departments > International Development
Supervisor: Shadlen, Kenneth C. and Phillips, Lauren

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