Quotas and Voting Shares in the IMF: Theory and Evidence

Abstract

The member countries of the International Monetary Fund (IMF) contribute resources to a common fund in order to provide credits. Member's quota, their participation in the capital of the IMF, not only determines their financial contribution but also the weighting of their votes and, therefore, their influence in the organization. Recent debates on the methods for determining quotas led to the approval in April 2008 of a partial reform of the current system. With the aim of contributing to this debate, we study the optimal voting rule in the IMF. To do this, we adapt Barberà and Jackson's (2006) model of optimal voting rules in heterogeneous federations. The model predicts that each country's votes should be weighted according to its participation in international trade, per capita income, and the level of international reserves.

JEL classification: D72 ; F32 ; F33 ; F41