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 political economy literature defines a lender of last resort as seeking to mitigate financial crises through ample liquidity provision. Notwithstanding its mandate of global financial stability, we develop the notion of the International Monetary Fund (IMF) as a lender of partial resort because of its institutional constraints, or its insufficient resources to fulfill this mandate. Compared to a central bank that freely seeks to quell systemic risk, the IMF must constrain the size of its balance sheet to mitigate moral hazard. Not only does this temper its ability to fulfill its role as a lender-of-last-resort, but also often compels an early exit from its lending relationships. In this paper, we examine this understudied phenomenon of IMF withdrawal, finding that IMF lending is conditioned by global contagion. Employing a comparative content analysis of IMF decision-making in two of its largest borrowers, Argentina and Greece, we show the IMF provides extensive liquidity to stabilize systemic risks during periods of high global contagion. However, when the IMF perceives minimal contagion risk, it focuses on moral hazard, and willingly cuts its lending relations to preserve its reputation and resources for future crises. These findings have important implications for international institutions in the face of public contestation and global crises.
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.
International Cooperation during Economic Shocks: The Political Consequences of U.S. Currency Swap Arrangements (with Yumi Park)
Draft available upon request
Who is Credible? Government Popularity and the Catalytic Effect of IMF Lending
2022, Comparative Political Studies https://doi.org/10.1177/00104140211060280
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.
When Does the Public Align with Protectionist Trade Opinions of Interest Groups? (with Haillie Na-kyung Lee)
Draft available upon request