01758cas a2200253 a 4500 AALejournalIMF008690 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451859799 1018-5941 BD-DhAAL BD-DhAAL Jeanne, Olivier. The Mussa Theorem (and Other Results on IMF-Induced Moral Hazard) / Olivier Jeanne, Jeromin Zettelmeyer. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (25 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Using a simple model of international lending, we show that as long as the IMF lends at an actuarially fair interest rate and debtor governments maximize the welfare of their taxpayers, any changes in policy effort, capital flows, or borrowing costs in response to IMF crisis lending are efficient. Thus, under these assumptions, the IMF cannot cause moral hazard, as argued by Michael Mussa (1999, 2004). It follows that examining the effects of IMF lending on capital flows or borrowing costs is not a useful strategy to test for IMF-induced moral hazard. Instead, empirical research on moral hazard should focus on the assumptions of the Mussa theorem. Mode of access: Internet Zettelmeyer, Jeromin. IMF Working Papers; Working Paper ; No. 2004/192 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/192/001.2004.issue-192-en.xml IMF e-Library