Joseph E. Stiglitz’s research while affiliated with Columbia University and other places

The International Monetary Fund (IMF) levies ‘surcharges’ or extra fees beyond the normal borrowing costs on member countries that either draw “sufficiently large” amounts of IMF credit to mitigate balance of payments constraints, or that maintain their credit exposure with the institution for “sufficiently long” periods of time. Such surcharges have become increasingly important: 10 countries paid surcharges in 2020. Now, 22 countries are subject to IMF surcharges, and revenues from surcharges between 2020 and 2023 have reached about $6.4 billion, just as countries are struggling to recover from their balance of payments issues amidst multiple shocks, such as COVID-19, climate change, war, and advanced economy interest rate changes. Reportedly designed to discourage the overuse of Fund resources and to ensure the financial soundness of the IMF’s own balance sheet, in recent years surcharges have come under scrutiny for two reasons. First, such surcharges are inherently pro-cyclical as they increase the burden of debt payments at exactly the time when a member country needs counter-cyclical and low-cost financing, contravening the very rationale of the IMF. Secondly, IMF surcharges have now become among the largest sources of revenue for the IMF, creating a perverse situation whereby the most economically disadvantaged member countries are a major source of income for Fund operations. This paper reviews the rationale for IMF surcharges, evaluates their impacts on member country economies and on the IMF business model, and presents and evaluates various proposals for IMF surcharge reform.

El artículo hace una crítica a las políticas neoliberales que usualmente se aplican para solucionar las distintas crisis y problemas económicos de las últimas décadas. Argumenta que tales acciones no se basan en la realidad económica, por lo que no son efectivas ni se enfocan en las formas en que afectan negativamente a distintos grupos sociales —como desempleo, aumento de desigualdad, crisis de vivienda—, pues sólo se conciben como daños colaterales. Aterriza esta reflexión en las políticas económicas aplicadas a dos fenómenos actuales: la crisis por la pandemia de covid-19 y la inflación, que han dejado en evidencia la necesidad de una intervención más activa del gobierno.

This paper analyses frameworks for the design of the rules for international trading, assuming that it is possible to have some rule of law. In the Arrow–Debreu benchmark, where there is no economic power and political power is seemingly irrelevant, there is no need for trade agreements—free trade is the optimal policy for each country. But under even minimal deviations from that benchmark, trade agreements matter. We focus on environments in which there are market failures, technology is endogenous, and there is political power. Power dynamics play, for instance, a critical role in the design, implementation, and enforcement of agreements, with the latter being a critical difference between international agreements and domestic contracts and a key determinant of the feasibility and consequences of agreements. With endogenous technology, trade rules proscribing industrial policies may lead to lower growth and greater cross-country inequalities. Finally, we develop a normative framework which may be useful in the design and implementation of trade rules.

We show that supply networks are inefficiently, and insufficiently, resilient. Upstream firms can expand their production capacity to hedge againstsupply and demand shocks. But the social benefits of such investments arenot internalized due to market power and market incompleteness. Upstreamfirms under-invest in capacity and resilience, passing-on the costs to downstreamfirms, and drive trade excessively towards the spot markets. There isa wedge between the market solution and a constrained optimal benchmark,which persists even without rare and large shocks. Policies designed to incentivizecapacity investment, reduce reliance on spot markets, and enhancecompetition ameliorate the externality.