01091pab a2200157 454500 180718b2005 xxu||||| |||| 00| 0 eng d Jeanne, Olivier The Mussa theorem (and other results on IMF-induced moral hazard) 2005 p.64-84. Using 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. International Monetary Fund Zettelmeyer, Jeromin IMF Staff Papers 68924 68924 68924 0 0 0 0 IIPA IIPA 2018-07-19 Volume no: 52, Issue no: Special issue AR69380 2018-07-19 2018-07-19 AR