November 4, 2020
Amanda Kennard (Stanford) and Diana Stanescu (Harvard)
Do International Bureaucrats Matter? Theory and Evidence from the IMF
Abstract
Scholars of international cooperation argue that member states delegate decision making authority to international organizations (IOs) as a commitment to non-interference. This logic conflates the objects of delegation with the mechanisms by which delegation is made credible. Member states delegate decision making authority to international bureaucrats. The credibility of delegation depends on institutional features of the relevant IO. Where delegation is credible, individual bureaucrats will exercise an independent impact on policy making. We test the credibility of delegation within the International Monetary Fund (IMF). We develop a formal model of bureaucratic appointments, characterize their equilibrium impact on market valuations of sovereign debt, and provide causal estimates of this impact employing an event study approach. Our analytical results provide a direct test of the credibility of delegation as well as a transparent theoretical interpretation of the causal estimand. We find strong and consistent support for the credibility of delegation to international bureaucrats.