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The economics of the democratic deficit: The effect of IMF programs on inequality
- Source :
- The Review of International Organizations. 16:599-623
- Publication Year :
- 2020
- Publisher :
- Springer Science and Business Media LLC, 2020.
-
Abstract
- This study investigates the distributional effects of international organizations within their member countries. It addresses the issue empirically by examining the causal effect of International Monetary Fund (IMF) programs on income inequality. Introducing a new instrumental variable for IMF programs, I exploit time variation in the IMF’s liquidity and cross-sectional variation in a country’s probability of having a lending arrangement with the IMF. Using panel data for 155 countries over the 1973–2013 period, the results show that IMF programs substantially increase income inequality in democracies, while having no such effect in non-democracies. The size of this effect on democracies is smaller the more democratized the IMF’s decision-making processes are. These results are consistent with the theory that powerful, ‘democratically deficient’ international organizations that interfere in domestic politics are capable of restricting the responsiveness of democratic governments to the preferences of their citizens.
- Subjects :
- Economics and Econometrics
Government
Inequality
Democratic deficit
Relative income
media_common.quotation_subject
Instrumental variable
05 social sciences
International economics
Monetary economics
Democracy
330 Economics
0506 political science
Market liquidity
Politics
Economic inequality
Loan
0502 economics and business
Political Science and International Relations
050602 political science & public administration
Economics
050207 economics
International monetary fund
Panel data
media_common
Subjects
Details
- ISSN :
- 1559744X and 15597431
- Volume :
- 16
- Database :
- OpenAIRE
- Journal :
- The Review of International Organizations
- Accession number :
- edsair.doi.dedup.....ed9daeb9cfd13d195a98b5cca12eeb78