Credibility in International Negotiation: Government Popularity and IMF lending 

The success of International Monetary Fund (IMF) programs largely depends on a borrowing country’s credibility. But, how do IMF officials assess the credibility of a borrowing government? My research demonstrates that IMF officials utilize a borrower's public evaluations of their government as a signal of the government’s credibility. IMF officials associate high public support for a government with a high likelihood of IMF program's success. The desire to enhance the institutional reputation and to safeguard its limited financial resources prompts IMF officials to become stricter toward less popular governments. As a result, the IMF provides smaller loans with more stringent conditions for less popular governments. I gathered data on the borrowing government's popularity, the relative size of IMF loans, and conditionality for 107 programs (1980-2014) for 37 countries. The evidence from statistical tests, accounting for potential endogeneity of government popularity and participation in IMF programs, support the argument: higher popularity at the program negotiation stage is associated with a larger IMF loan, and an increase in popularity during an IMF program is associated with less quantitative conditions in subsequent program years. 

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.