The large international bailouts of the 1990s have been criticized for differentreasons, in particular for generating moral hazard at the expense of theglobal taxpayer. We argue in this paper that some of these concerns areexaggerated or misleading because international bailouts have no or...

Intro -- Contents -- I. INTRODUCTION -- II. PROPOSAL FOR A NEW CRISIS-PREVENTION FACILITY -- III. THE BASIC MODEL -- IV. LAISSEZ-FAIRE -- V. EXISTING CRISIS-LENDING FACILITIES -- VI. TIMING-BASED CRISIS-LENDING FACILITY -- VII. EXTENSIONS AND DISCUSSIONS -- VIII. CONCLUSION -- APPENDIX I --...

This paper proposes that international rescue financing should not be provided to a country where a crisis first occurs, but rather to any country that suffers a subsequent crisis. Such a timing-based lending facility can be Pareto-superior to both laissez-faire and existing international crisis...

The large international bailouts of the 1990s have been criticized for different reasons, in particular for generating moral hazard at the expense of the global taxpayer. We argue in this paper that some of these concerns are exaggerated or misleading because international bailouts have no or...