Research
Photo: At the International Monetary Fund, fieldwork in 2017
Photo: Invited research presentation at the International Monetary Fund, 2024
Who is Credible? Government Popularity and the Catalytic Effect of IMF Lending
2022, Comparative Political Studies
In this paper, I explain variations in international investors’ reactions to International Monetary Fund (IMF) programs. Investors react favorably if a borrowing government is credibly committed to implementing essential IMF conditionality. Instead of engaging complex information processing about economic reform, however, investors rely on a heuristic device to assess the borrower’s domestic political conditions. I argue that a borrowing government’s popularity is an important cue for investors to assess the prospect of the program. Investors associate higher government popularity with better implementation of the program and react more favorably to more popular borrowers. Using annual data from up to 52 emerging market economies from 1998 to 2017, I find robust statistical evidence supporting these claims: an IMF program alone does not restore investor confidence. Rather, an IMF program carried out by a strong government does. My findings have important implications for the study of global financial governance and credible commitment.
Global Contagion Risk and IMF Credit Cycles: Emergency Exits and Revolving Doors (with Stephen B. Kaplan), 2024, Regulation & Governance
Why does the International Monetary Fund (IMF) exit its lending relationships before member states have resolved their financial crises? It is particularly surprising given that the IMF often resumes its lending shortly after its withdrawal. We argue that IMF withdrawals are conditioned by global contagion risk. The tension between the IMF’s mandate of global financial stability and its limited financial resources compels the IMF’s early exit from its lending relationships. During periods of high global contagion, the IMF prioritizes its mandate by continuing its lending despite noncompliance. However, when the IMF perceives minimal contagion risk, it focuses on moral hazard, and willingly cuts its lending ties to preserve its reputation and resources for future crises. Employing a comparative analysis of IMF decision-making in two of its largest borrowers, Argentina and Greece, we find supportive evidence for our claims.
Balancing International Commitments and Democratic Accountability: Exit Clauses in Investment Agreements (with Tuuli-Anna Huikuri) 2025, International Studies Quarterly
Why do states sign international agreements with varying commitment lengths? Growing literature examines when states exit international institutions. However, international agreements differ in how long a state must commit before it is legally free after a withdrawal decision. Notably, bilateral investment treaties (BITs) exhibit significant variation in commitment periods even in the same issue area. We argue that exit clauses in BITs depend on both domestic uncertainty and international commitment issues. Capital-exporting countries aim to lock in importers to protect their firms while maintaining withdrawal flexibility to adapt to domestic politics. This trade-off is pressing for governments accountable for public demands. They prefer longer commitments with importers having weak property rights and shorter ones with those having strong protections. Analyzing original dataset of 2,500 BITs, we find that democratically accountable governments adjust BIT duration based on partner states’ credibility. This research enhances understanding of international institution durability and negotiations of economic agreements.
Are Dollars Popular? The Fed's Currency Swap Arrangements and Recipient Governments' Popularity (with Yumi Park) Revise and Resubmit
The Federal Reserve (the Fed) has emerged as a global lender of last resort by providing currency swap arrangements (CSAs) to foreign central banks. While existing literature explores the economic consequences, there is limited understanding of their political ramifications. Using quarterly data from the 2008 global financial crisis, we find that Fed swap lines are linked to increased domestic public support for recipient governments. We suggest this is because swaps are typically followed by exchange rate stabilization and expansionary monetary policies. While ordinary citizens may not be directly aware of swaps, they perceive currency stabilization and stimulus measures as signals of positive economic turnarounds, thereby increasing support for incumbents. The rise in approval ratings following CSAs is striking, especially given that CSAs are implemented during global shocks. Our findings demonstrate that the Fed, much like other international organizations, can influence foreign countries' domestic politics.
Perfect Scapegoats? Blaming and Defending the International Monetary Fund (with Tim Heinkelmann-Wild and Tom Hunter) Revise and Resubmit
International organizations (IOs) are considered ideal scapegoats for opportunistic member state governments for contested IO policies. Yet we know surprisingly little about whether and when governments indeed shift blame onto IOs. We argue that IO scapegoating is not as pervasive as commonly assumed because blaming IOs is costly. Using the International Monetary Fund (IMF) as a case, we show that governments face a trade-off between international cooperation gains and domestic political gains when responding to implementation of contested IO policies: While blaming the IOs helps governments distance themselves from contested IO policies, it reduces the gains from their cooperation with the IO by undermining their credibility. To reap cooperation gains, governments can instead defend the IO, but doing so entails the risk of bearing domestic political cost. We suggest that a government’s dependence on international cooperation as well as their vulnerability to domestic contestation shapes how governments cope with the cooperation-contestation trade-off. With an original dataset of over 800 hand-coded IMF statements by heads of governments in Argentina, Ecuador, Ireland, Greece, Ukraine, Sri Lanka, and South Korea, we find supportive evidence for our expectations. Crucially, we observe that whilst governments do frequently blame the IMF, they in fact defend the Fund more than they blame it. Our findings yield important implications for international cooperation in times of heightened politicization.
The Trilemma and Trade Policy: The Monetary and Financial Roots of Constrained Protectionism (with Mark Copelovitch and Jon Pevehouse)
We argue that countries’ monetary and financial commitments are a key determinant of their use of “constrained protectionism” – temporary trade barriers (TTBs) that are legal within the WTO-based multilateral trade regime – and of countries’ involvement in WTO disputes. In line with the Mundell-Fleming trilemma, governments who are committed to fixed exchange rates and capital account openness face greater constraints on their macroeconomic policy autonomy. We argue that these government have strong domestic political incentives to use TTBs such as anti-dumping and safeguard duties. These policies, in turn, increase the likelihood that a country will be targeted within the WTO dispute settlement mechanism (DSM). We further argue that this is particularly true when countries are experiencing more severe balance of payments problems. Using a dataset of GATT/WTO members from 1985 to 2012, we find that countries with more stringent trilemma constraints and larger current account deficits are more likely to employ TTBs. These results strongly suggest that the link between monetary and financial commitments and trade policy extends to the politics of trade within the modern GATT/WTO system. They also indicate the need for more research on the complex interactions between trade, monetary, and financial policies in the global economy.