Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law
Stephen C Nelson
An important theory of international cooperation asserts that governments comply with international law because of the reputational costs incurred by reneging on public agreements. Countries that sign binding international agreements in the realm of monetary relations signal their commitment to an open economic system, which should reassure international market actors that the government is committed to sound economic policies. If the theory is correct, we should observe evidence that noncompliance is in fact costly. I test this argument by examining the effect of noncompliance with Article VIII of the IMF's Articles of Agreement on sovereign risk ratings. The results show that noncompliance with the agreement mitigates any benefits that accrue to Article VIII signatories. The empirical evidence suggests that, in addition to improving economic and political conditions at home, governments in the developing world would improve their access to financial markets by signing and complying with international monetary agreements.
Review of International Organizations
Compliance with international law
The International Monetary Fund
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Monetary Law Business & Economics
Sovereign Risk Business & Economics
Noncompliance Business & Economics
Monetary Agreement Business & Economics
Law Social Sciences
Reneging Business & Economics
International Law Business & Economics
Government Business & Economics
Nelson, S. C. (2010). Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law. Review of International Organizations, 5(2), 107-139. https://doi.org/10.1007/s11558-010-9080-7
Nelson, Stephen C. / Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law. In: Review of International Organizations. 2010 ; Vol. 5, No. 2. pp. 107-139.
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title = "Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law",
abstract = "An important theory of international cooperation asserts that governments comply with international law because of the reputational costs incurred by reneging on public agreements. Countries that sign binding international agreements in the realm of monetary relations signal their commitment to an open economic system, which should reassure international market actors that the government is committed to sound economic policies. If the theory is correct, we should observe evidence that noncompliance is in fact costly. I test this argument by examining the effect of noncompliance with Article VIII of the IMF's Articles of Agreement on sovereign risk ratings. The results show that noncompliance with the agreement mitigates any benefits that accrue to Article VIII signatories. The empirical evidence suggests that, in addition to improving economic and political conditions at home, governments in the developing world would improve their access to financial markets by signing and complying with international monetary agreements.",
keywords = "Compliance with international law, Sovereign risk, The International Monetary Fund",
author = "Nelson, {Stephen C}",
journal = "Review of International Organizations",
Nelson, SC 2010, 'Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law', Review of International Organizations, vol. 5, no. 2, pp. 107-139. https://doi.org/10.1007/s11558-010-9080-7
Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law. / Nelson, Stephen C.
In: Review of International Organizations, Vol. 5, No. 2, 01.01.2010, p. 107-139.
T1 - Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law
AU - Nelson, Stephen C
N2 - An important theory of international cooperation asserts that governments comply with international law because of the reputational costs incurred by reneging on public agreements. Countries that sign binding international agreements in the realm of monetary relations signal their commitment to an open economic system, which should reassure international market actors that the government is committed to sound economic policies. If the theory is correct, we should observe evidence that noncompliance is in fact costly. I test this argument by examining the effect of noncompliance with Article VIII of the IMF's Articles of Agreement on sovereign risk ratings. The results show that noncompliance with the agreement mitigates any benefits that accrue to Article VIII signatories. The empirical evidence suggests that, in addition to improving economic and political conditions at home, governments in the developing world would improve their access to financial markets by signing and complying with international monetary agreements.
AB - An important theory of international cooperation asserts that governments comply with international law because of the reputational costs incurred by reneging on public agreements. Countries that sign binding international agreements in the realm of monetary relations signal their commitment to an open economic system, which should reassure international market actors that the government is committed to sound economic policies. If the theory is correct, we should observe evidence that noncompliance is in fact costly. I test this argument by examining the effect of noncompliance with Article VIII of the IMF's Articles of Agreement on sovereign risk ratings. The results show that noncompliance with the agreement mitigates any benefits that accrue to Article VIII signatories. The empirical evidence suggests that, in addition to improving economic and political conditions at home, governments in the developing world would improve their access to financial markets by signing and complying with international monetary agreements.
KW - Compliance with international law
KW - Sovereign risk
KW - The International Monetary Fund
JO - Review of International Organizations
JF - Review of International Organizations
Nelson SC. Does compliance matter? Assessing the relationship between sovereign risk and compliance with international monetary law. Review of International Organizations. 2010 Jan 1;5(2):107-139. https://doi.org/10.1007/s11558-010-9080-7