UCLA International Institute

Do domestic institutions influence decisions to participate in IMF programs? I argue that executives facing more veto players are more likely to turn to the IMF, but the IMF is more likely to conclude agreements when there are fewer veto players. Reform-minded executives often use the IMF’s leverage to push through unpopular policies. The more actors in a political system with the veto power to prevent policy change, the more likely an executive will find the IMF useful. Even with the added pressure of the IMF, however, the presence of additional veto players may limit policy change. Such limits are not preferred by the IMF. Thus, as the number of veto players increases, executives are more likely to enter into IMF agreements; the IMF is less likely. To test these arguments, I use a dynamic version of bivariate probit with partial observability.