01040pab a2200133 454500008004000000100002000040245007000060260000900130300001300139520067600152650003200828700002500860773002100885180718b2005   xxu||||| |||| 00| 0 eng d  aJeanne, Olivier  aThe Mussa theorem (and other results on IMF-induced moral hazard)  c2005  ap.64-84.  aUsing a simple model of international lending, we show that as long as the IMF lends at a 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 and 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. - Reproduced.  aInternational Monetary Fund  aZettelmeyer, Jeromin  aIMF Staff Papers