Public choice analysis can be helpful in predicting the course of European monetary integration and policy. The median (or decisive) voter theorem, the theory of the political business cycle and the economic theory of bureaucracy are all applicable. The purpose of this paper is to explain and...

Using panel data for 106 countries in 1971-1997, we estimate generalized least squares regressions to explain IMF lending as well as monetary and fiscal policies in the recipient countries. With respect to moral hazard, we find that a country's rate of monetary expansion and its government...