Research

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I study international political economy with a focus on international organizations, economic policymaking, and domestic politics. The followings are brief introductions for selected research projects I work on. 

Photo: At the International Monetary Fund, fieldwork in 2017

Global Contagion and IMF Credit Cycles: A Lender of Partial Resort? (with Stephen B. Kaplan)
 

The International Monetary Fund (IMF) has an incomplete governance architecture characterized by insufficient resources to fulfill its global financial stability mandate. We argue this institutional incompleteness influences how the IMF balances tensions between systemic risks and moral hazard, and when it surprisingly exits lending relationships. During high global contagion periods, the IMF targets stabilizing systemic risks to fulfill its mandate, granting large loans and overlooking non-compliance with conditionality.  However, when the IMF perceives minimal contagion risk, it focuses on moral hazard, extending smaller loans with stricter conditionality, and willingly cuts financial ties to preserve its reputation and resources for future crises. Employing a comparative case analysis of IMF decision-making for Argentina (1998-2001) and Greece (2010-2015), we find evidence supporting our theoretical priors from content analysis of IMF executive board meeting minutes, complementary archival evidence, and field research interviews.  These findings have important implications for the IMF, institutionalism, and development. 

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.

Who is Credible? Government Popularity and the Catalytic Effect of IMF Lending
(Forthcoming in 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.

The Political Consequences of U.S. Currency Swap Arrangements (with Yumi Park) 

Since the 2008 Global Financial Crisis, the US Federal Reserve (the Fed) has actively used central bank liquidity swap lines to provide US dollar liquidity around the world. This paper investigates the political consequences of the US dollar swap lines in the recipient country. Consistent with its policy objectives, swap lines adjust dislocation in exchange rates, leading to appreciation of a recipient country’s currency against US dollars. We argue that when the recipient economy heavily depends on exports, such exchange rate shock negatively affects the recipient country’s public support for the government. Using the dataset for 9 swap lines out of all 14 lines (covering 17 countries, including 9 Eurozone countries) between 2004 and 2020, we find that government popularity is likely to drop after a swap line announcement. This result, however, is conditional: swap lines are associated with a decrease in government popularity, only when the recipient economy has a large exporting sector. Our results suggest that, contrary to the conventional wisdom, swap lines entail domestic political costs but despite the political costs, swap lines may be the least bad option for governments during financial exigencies.