the european court of justice national governments and legal integration in the european union we develop a game theoretic model of the conditions under which the european court of justice can be expected to take adverse judgments against european union member governments and when the governments are likely to abide by these decisions the model generates three hypotheses first the greater the clarity of eu case law precedent the lesser the likelihood that the court will tailor its decisions to the anticipated reactions of member governments second the greater the domestic costs of an ecj ruling to a litigant government the lesser the likelihood that the litigant government will abide by it and hence the lesser the likelihood that the court will make such a ruling third the greater the activism of the ecj and the larger the number of member governments adversely affected by it the greater the likelihood that responses by litigant governments will move from individual noncompliance to coordinated retaliation through new legislation or treaty revisions these hypotheses are tested against three broad lines of case law central to ecj jurisprudence bans on agricultural imports application of principles of equal treatment of the sexes to occupational pensions and state liability for violation of eu law the empirical analysis supports our view that though influenced by legal precedent the ecj also takes into account the anticipated reactions of member governments

the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

current status and future projections of lng demand and supplies a global prospective abstract an unceasing growth of gas consumption in domestic households industry and power plants has gradually turned natural gas into a major source of energy main drivers in this development are the technical and economic advantages of natural gas it is a clean versatile and easily controllable fuel on this basis natural gas is often considered the form of energy that will be the bridging fuel to a sustainable energy system sometime after 2050 unlike other main sources of energy such as oil and coal gas is not traded on an actual world market this paper provides an overview on demand and supplies of natural gas lng in the past as a function of gas prices gas technology gas sweetening liquefaction shipping and re gasification and gas market and how they have changed recently it also discusses the likely developments in global lng demand for the period to the year 2030

explaining cooperation under anarchy hypotheses and strategies what circumstances favor the realization of mutual interests in the absence of centralized authority and through what strategies can nations foster the emergence of cooperation by altering the circumstances that they confront elementary game theory suggests three sets of conditions that serve as proximate explanations of the incidence of cooperation and discord i payoff structure mutual and conflicting preferences 2 the shadow of the future single play and iterated games and 3 number of players two person and n person games each of these three attributes of context may be subject to willful modification nations may create the preconditions for cooperation through strategies to alter payoffs lengthen the shadow of the future and reduce the number of actors required to realize limited mutual interests

multilateralism bilateralism and exclusion in the nuclear proliferation regime i use the nuclear proliferation regime to show that dyadic diplomacy is not necessarily incompatible with the building of a multilateral regime bilateralism is not the opposite of multilateralism but an efficient component thereof although this point will not be new to most students of institutions no general rationale has so far been offered on the complementarity of bilateral and multilateral diplomacy start ing from a characterization of proliferation as the result of a large number of prisoner s dilemmas played out between states engaged in local dyadic rivalries i demonstrate that it is possible for the superpowers to design an optimal mix of threats and bribes in which states with low compliance costs join the regime on the terms of the multi lateral treaty alone states with intermediate compliance costs need additional cus tomized incentives delivered through bilateral agreements and states with high compliance costs are not only left out of the regime but also punished for nonpartici pation i draw a few comparative statics that i systematically test on nuclear prolif eration treaty npt membership data i discuss the applicability of the model to the currency trade and aid regimes

estimating economies of scale in higher education abstract if colleges and universities periodically operate at unexpected enrollment levels measured costs may reflect short run rather than long run minimum average costs for different levels of output if there is a systematic relationship between operating at disequilibrium and institutional size cross sectional estimates of the degree and level of scale economies may be biased using data from 1987 88 we assess the importance of the equilibrium assumption for estimates of scale economies in higher education

asymmetric volatility spillovers between crude oil and international financial markets abstract in this paper we examine asymmetric volatility spillovers between oil and international stock markets in a vector autoregression framework using a directed acyclic graph dag technique we provide evidence that bad total volatility spillovers dominate the system and change over time suggesting that a pessimistic mood and uninformed traders who tend to increase volatility dominate in markets positive spillovers of oil markets dominated from 2006 to mid 2009 but reversed after mid 2009 moreover the spillovers from good volatilities in oil markets to bad volatilities in global stock markets were significantly positive during the economic recovery period the recent important economic and political events have influenced asymmetries in volatility spillovers

policy rivalry among industrial states what can we learn from models of strategic trade policy the economic theory of international trade has changed dramatically over the last decade by admitting into its mainstream a body of literature that focuses on the implications of monopolistic and oligopolistic elements in international markets by applying the tools of the new industrial organization in an international context two new classes of models have emerged models of intra industry trade and models of strategic trade policy the policy implications of models of strategic trade policy were quite disturbing for the economics profession since these models demonstrated that the classical harmony between national and cosmopolitan welfare maximization does not exist if one assumes opportunities for strategic manipulation of oligopolistic international industries this article reviews two prominent models of strategic trade policy the brander spencer model and the krugman model and relates them to more familiar earlier concepts such as stackelberg s asymmetrical duopoly solution and the venerable infant industry argument for government intervention the primary purpose of this article however is to provide a synopsis of the large literature addressing the question of whether models of strategic trade policy can give guidance for government policy

less filling tastes great the realist neoliberal debate this essay examines and reformulates the realist neoliberal debate focusing initially on the issue of the attribution of goals to states we argue that not only are goals merely the epiphenomena of other things but also that their specification constitutes but a re description of strategic environments that is although an attribution of goals may contribute to our characterization of outcomes a discussion of them is not central to the development of a theory that explains and predicts the outbreak of conflict and the patterns of cooperation instead we argue that the realist neoliberal debate should be recast so that our central research agenda is the development of substantively specific models that allow us to ascertain how the equilibrium to a game in which states structure international affairs influences the types of issue specific subgames states play how countries coordinate to equilibria of different types how we can characterize the coordination problems associated with different equilibria how states can enhance the attractiveness of an equilibrium and how states can signal commitments to the strategies that are part of that equilibrium

global impact of uncertainties in china s gas market abstract this paper examines the uncertainties in chinese gas markets analyze the reasons and quantify their impact on the world gas market a literature review found significant variability among the outlooks on china s gas sector further assessment found that uncertainties in economic growth structural change in markets environmental regulations price and institutional changes contribute to the uncertainties the analysis of china s demand and supply uncertainties with a world gas trading model found significant changes in global production trade patterns and spot prices with pipeline exporters being most affected china s domestic production and pipeline imports from central asia are the major buffers that can offset much of the uncertainties the study finds an asymmetric phenomenon pipeline imports are responding to china s uncertainties in both low and high demand scenarios while lng imports are only responding to high demand scenario the major reasons are higher top levels and the current practice of import only up to the minimum top levels for lng as well as a lack of liberalized gas markets the study shows that it is necessary to create lng markets that can respond to market dynamics through either a reduction of top levels or change of pricing mechanisms to hub indexation

the change of tide in political cooperation a limited information model of european integration european integration follows a puzzling stop and go pattern that traditional international reations theories cannot fully explain the predominating paradigms only account for either the achievements or the setbacks of the integration process an information based explanation makes it possible to move beyond structural accounts provided by realist and functionalist scholarship such an approach yields solid micro level foundations of international bargaining and focuses on leaders use of threats in negotiations about regional cooperation situations involving governments agreeing on the necessity of further integration but disagreeing about its level create room for strategic manipulation of information asymmetries this type of uncertainty stems from the manipulator s information and control advantages concerning domestic costs the analysis of different summit meetings demonstrates the empirical relevance of such maneuvers for the dynamics of european integration

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

china s natural gas resources production and its impacts abstract in order to achieve energy consumption targets and subsequently reduce carbon emissions china is working on energy strategies and policies aimed at actively increasing the consumption of natural gas the lowest carbon energy of the fossil fuels and to enhance the proportion of gas in total primary energy consumption to do this it is a necessary prerequisite that china must have access to adequate gas resources and production to meet demand this paper shows that the availability of domestic gas resources are overestimated by china s authorities due to differences in classification and definitions of gas resources reserves between china and those accepted internationally based on official gas resource figures china s gas production remains low with respect to the projected demand and will only be 164 6 bcm in 2020 far lower than the 375 bcm of forecast demand the gap between gas production and demand will reach 210 4 bcm by 2020 existing plans for the importation of gas and the development of unconventional gas will not close this gap in the next 10 years and this situation will therefore present a severe challenge to china s gas security achievement of targets in improving energy consumption structure and reducing carbon emissions

the reform of the natural gas industry in the pr of china abstract in light of china s energy revolution reform of the natural gas industry and the acceleration of the natural gas sector development are of strategic significance to ensure china s energy security to optimise the energy consumption structure and to address environmental pollution in recent years the chinese government has introduced numerous policies and developmental plans to speed up natural gas sector reform which have led to considerable progress however china s natural gas industry and reform still encounter many problems and challenges the purpose of this study is to investigate the reform of the natural gas industry in china first the current situation of china s natural gas industry is outlined next four aspects of natural gas industry reform are systematically reviewed natural gas administrative system reform industry structure reform pricing mechanism reform and tax and fee system reform third the major problems and challenges facing further reform of the natural gas industry are analysed in depth finally this study proposes policies and suggestions for china s natural gas sector in the coming future

moving forward one step at a time we reply to john duffield s critique of the rational design project a special issue of international organization that explains the features of international institutions from a game theoretic perspective the project was deliberately limited to the analysis of explicit and observable institutional arrangements and focused on the specific institutional properties of centralization membership scope control and flexibility its empirical contribution relies on case studies but it is significantly amplified by the tight connections provided by a common theoretical perspective that is oriented toward testing a set of specific conjectures about institutional design the results raise further issues of measurement and cross case comparisons that provide valuable lessons for future work on institutional design although all of these research design choices are worth revisiting and questioning as duffield does the initial results of the rational design project show that it provides a good basis from which to explore alternative research design decisions

power politics and international trade r recent literature attributes the relative scarcity of open international markets to the prisoner s dilemma structure of state preferences with respect to trade we argue that the prisoner s dilemma representation does not reflect the most critical aspect of free trade agreements in an anarchic international system namely their security externalities we consider these external effects explicitly doing so leads us to two conclusions 1 free trade is more likely within rather than across political military alliances and 2 alliances are more likely to evolve into free trade coalitions if they are embedded in bipolar systems than in multipolar systems using data drawn from an 80 year period beginning in 1905 we test these hypotheses the results of the analysis make it clear that alliances do have a direct statistically significant and large impact on bilateral trade flows and that this relationship is stronger in bipolar rather than in multipolar systems in the early 1970s students of international relations began what would become a long and heated debate about the political correlates of open international markets recently however an important element of consensus has begun to emerge most contributors to this debate now seem to agree that the prisoner s dilemma structure of state preferences with respect to trade explains the relative dearth of open international markets here we argue that what has become the standard prisoner s dilemma representation neglects the most critical aspect of free trade agreements in the anarchic international system namely their security externalities we consider these external effects explicitly in order to do so we construct and analyze a simple game theoretic model the results of this analysis demonstrate that tariff games between allies differ systematically from those played between actual or potential adversaries these differences imply that free trade is more likely within rather than across political military alliances however our analysis also suggests that the evolutionary prospects of alliances vary those that are the products of bipolar systems are more likely to evolve into free trade coalitions than are their multipolar counterparts less credible exit threats and clearer responsibilities for alliance stability explain the advantage of a bipolar system we test this argument using data drawn from an 80 year period beginning in 1905 the empirical analysis supports our argument it demonstrates that alliances have a direct statistically significant and large effect upon bilateral trade moreover it shows that on average alliances have a much stronger effect on trade in a bipolar than in a multipolar world 2

the gains debate framing state choice the theoretical bifurcation of international relations theory into neo realist and neo liberal camps has resulted in a gains debate that says little about an empirical world in which states exhibit both relative and absolute gains pursuit this article deploys prospect theory in an attempt to move beyond the gains debate the intent here is synthetic by bringing the predictions of both perspectives under a single theoretical umbrella we can model a broader set of state behavior the thesis developed demonstrates that states in a gains frame pursue absolute gains and are risk averse while states in a losses frame pursue relative gains and are risk acceptant this hypothesis is assessed against the behavior of the european community in the formation of the montreal protocol a regime intended to protect the earth s protective ozone shield the new model accurately predicts the timing and content of shifts in ec preferences suggesting that a synthesis of realist and liberal approaches is possible

the cost structure of american research universities 1597 this study estimates translog variable cost functions for 147 american doctorate granting universities accounting for three major products of these institutions undergraduate and graduate instruction and research explicit measures of research output and quality are employed evidence is found for considerable economies of scale for the average institution as well as economies of scope related to the joint production of undergraduate and graduate instruction the public or private ownership of an institution is not significant for the explanation of variable costs the intensity of state regulation in the public sector does not have a significant impact on production efficiency copyright 1991 by mit press

entrenching the yoshida defense doctrine three techniques for institutionalization japan s level of defense expenditure relative to tbe size of its economy bas long been uniquely low among the major industrialized countries as of 1995 japan s expenditures stood at 0 96 percent of gross domestic product gdp even adding to this tbe approximately 0 3 percent of gdp devoted to pensions for retired personnel the level of spending is considerably less than that of major westem states such as tbe united states united kingdom france and germany as well as industrialized asian states such as south korea taiwan malaysia and singapore furthermore these relative magnitudes have remained reasonably stable over tbe past few decades see table 1 defense expenditure as a percentage of gdp or gnp gross national product often referred to simply as defense burden has over tbe past few decades become the standard benchmark for measuring a state s relative contribution to international security because of this tbe appropriateness and consequences of japan s relatively low expenditure of national wealth on defense bave been hotly debated botb in japan and abroad critics accuse japan of unfairly exploiting a defense free ride to build its economic success and others worry that japan s lack of military capabilities prevents it from becoming a normal state whose political role is commensurate

the evolutionary stability of cooperation is cooperation without central authority stable if so how robust is it despite what might be the conventional wisdom the evolution of cooperation did not solve this problem deductively in fact results obtained later by others seem to have contradicted the book s main message reexamining this exceptionally influential work yields a new picture part of axelrod s evolutionary story turns out to be false but the main intuition that retaliatory strategies of conditional cooperation are somehow advantaged proves correct in one specific and significant sense under a standard evolutionary dynamic these strategies require the minimal frequency to stabilize hence they support the most robust evolutionary equilibrium the easiest to reach and retain moreover the less efficient a strategy the larger is its minimal stabilizing frequency hobbesian strategies of pure defection are the least robust our main theorems hold for a large class of games that pose diverse cooperation problems prisoner s dilemma chicken stag hunt and many others

competition and diversification in public and private higher education the development of mass higher education and growing competition between higher education institutions has given increasing visibility to the issue of diversification this article analyses the issue of programme diversification using a panel of 181 portuguese higher education institutions over the period 1995 to 2007 by comparing the behaviour of public and private institutions the results show that the legal status of institutions is the major determinant of programme diversification as private institutions are far more specialized than their public counterparts the study also evaluates the role of other institutional variables such as the institution s size age location institutional mission and research intensity to explain differences in the diversification behaviour of higher education institutions the results provide important insights as competition has been thought to improve the performance of higher education institutions

the geopolitics of cross border electricity grids the israeli arab case abstract countries often attempt to establish regional electricity grids however whereas research on natural resources frequently seeks to understand policy outcome through a geopolitical prism when it comes to electricity studies the prism is always economic or technical hence this study is a first attempt to identify the geopolitical dimension of cross border electricity grids the study argues that success in establishing electricity grids requires identifying how the geopolitical dimension interplays with the physical dimension to examine the role of these geopolitical bottlenecks the study examines negotiation protocols spanning over 15 years on establishing ten grid connections between israel and its arab neighbors it finds that electricity geopolitics has been used both as a platform for deeper international cooperation and as a stick against neighboring states when policies are driven by a peace dividend proposals for grid connection appear to evolve and overcome the dependency and the security economy bottlenecks when relations deteriorate proposals for grid connections appear to undergo reconsideration and to be held hostage by higher politics if when and how electricity grids materialize is a function of the nature of the electricity network as a twofold package and of the ability of the planning process to accommodate geopolitical uncertainty

side payments versus security cards domestic bargaining tactics in international economic negotiations the literature on international economic cooperation has devoted relatively little attention to domestic bargaining tactics and their determinants recent scholarship has tended to stress the utility and frequency of side payments while discounting other prominent bargaining tactics and a broader understanding of tactical choice this article argues that policymakers choose among domestic bargaining tactics to garner support when faced with situations in which other government officials or societal interest groups block the ratification of international economic agreements focusing on offers of side payments and attempts at issue redefinition the article s findings suggest that differences in domestic resistance to proposals of material compensation and in external security threat may explain choices between those tactics in domestic bargaining

the concentration of capabilities and international trade over the course of the previous two decades political scientists have become increasingly interested in the relationship between international politics and global trade much of the literature on this topic centers on the effects of a hegemonic distribution of power on commerce hegemonic stability theorists argue that hegemony is a necessary condition for the existence of a liberal economic order and that in the absence of a hegemon a liberal international economy is particularly difficult to establish and maintain however a growing number of theoretical and empirical critiques have been leveled against the gemonic stability theory and the issue of whether hegemony helps shape patterns of global trade continues to be the topic of heated debate

institutions of higher education as multi product firms economies of scale and scope a multiple output cost function is estimated for institutions of higher education in the united states employing data for 1981 82 the authors flexible fixed cost quadratic function includes three outputs undergraduate teaching graduate teaching and research grants and one input price average faculty salaries results indicate the existence of scope economies at least up to a point for both public and private institutions of higher education ray economies of scale are more pronounced in the private sector and product specific economies of scale are observed only in the public sector for research and graduate teaching copyright 1989 by mit press

the community trap liberal norms rhetorical action and the eastern enlargement of the european union discipline 3 i begin my search for an explanation with liberal intergovernmentalism the most prominent and promising rationalist account of the major turning points in the history of european integration this perspective accounts plausibly for most of the enlargement preferences of the member states and explains why the association of central and eastern european countries to the european community ec was the initial outcome of the bargaining process among them it fails however to account for the community s decision to go beyond association and offer these countries full membership this puzzle is solved through a sociological perspective in which enlargement is understood as the expansion of international community if the eu is conceived of

coordination and collaboration regimes in an anarchic world the study of regimes can contribute to our understanding of international politics only if regimes represent more than international organizations and less than all international relations the conceptualization of regimes developed here accepts the realist image of international politics in which autonomous self interested states interact in an anarchic environment yet there are situations in which rational actors have an incentive to eschew unconstrained independent decision making situations in which individualistic self interested calculation leads them to prefer joint decision making regimes because independent self interested behavior can result in undesirable or suboptimal outcomes these situations are labeled dilemmas of common interests and dilemmas of common aversions to deal with these states must collaborate with one another or coordinate their behavior respectively thus there are different bases for regimes which give rise to regimes with different characteristics coordination is self enforcing and can be reached through the use of conventions collaboration is more formalized and requires mechanisms both to monitor potential cheating and to insure compliance with the regime the article elucidates the assumptions of such an interest based approach to regimes assimilates alternative explanations into this framework and develops the implications for regime maintenance and change

peace war and the balance of power every possible relation between the distribution of power and the likelihood of war has been defended somewhere in the literature on international politics war is least likely if power is distributed equally war is least likely if power is distributed unequally and the distribution of power has no effect on the likelihood of war i try to settle this dispute by examining the effect of expectations about the outcome of war on the choice between war and negotiation i argue that each of these mutually contradictory propositions can be derived from some plausible set of premises and thus that which one is correct depends on which set of premises best describes a situation the most important factors affecting the relation between the distribution of power and the likelihood of war are 1 whether the terms of a compromise agreement that might be accepted in lieu of war affect the distribution of power between the antagonists and therefore the probability that the agreement will be enforced and 2 how many states interests will be affected by the outcome

the political economy of nontariff barriers a cross national analysis nontariff barriers to trade are most pervasive when deteriorating macroeconomic conditions give rise to demands for protection by pressure groups when countries are sufficiently large to give policymakers incentives to impose protection and when domestic institutions enhance the ability of public officials to act on these incentives statistical results based on a sample of advanced industrial countries during the 1980s support the argument that the incidence of nontariff barriers tends to be greatest when the preferences of pressure groups and policymakers converge more attention should be devoted to the interaction between societal and statist factors in cross national studies of trade policy

the price and income elasticity of china s natural gas demand a multi sectoral perspective abstract natural gas as a clean low carbon energy will play an important role in the world s low carbon energy transformation in this paper research on the elasticity of natural gas demand is surveyed and it is found that the price and income elasticities of natural gas demand in different sectors are distinctive in particular this paper constructs an autoregressive distribution lag model to study the elasticity of natural gas demand in various sectors of china the results show that except for the residents sector the long run price elasticity of natural gas demand in other sectors is greater than 0 which is contrary to the estimates of developed countries the demand for natural gas is complementary to coal in industrial and power generation sectors which is also different from developed countries the elasticity of natural gas demand in residents sector is lack in price elasticity but abundant in income elasticity which is similar to the developed countries the results also shows that natural gas and oil are substitutes for each other in the transportation sector and natural gas and coal are substitutes for each other in service sector

bargaining enforcement and international cooperation neoliberals and their neorealist critics have debated the relative importance of two main obstacles to international cooperation problems of cheating and enforcement and problems of relative gains by contrast i argue that problems of international cooperation have a common strategic structure in which a third distinct obstacle plays a crucial role almost regardless of the issue area states must first resolve the bargaining problem of agreeing on terms before they can implement and begin to enforce an agreement furthermore the bargaining and enforcement problems interact using a game model i show that if states must bargain to determine the deal to be enforced the shadow of the future cuts two ways a high expectation of continued interactions may make enforcing the agreement easier but it can also give states an incentive to bargain harder delaying agreement in hopes of getting a better deal empirical evidence from trade and arms control negotiations suggests that this mechanism may help to explain the costly standoffs that are often observed in international politics and are problematic for received neoliberal theories

risks in global natural gas markets investment hedging and trade recent supply security concerns in europe have revived interest into the natural gas market we investigate infrastructure investment and trade in an imperfect market structure for various possible risks for both supply and demand we focus on three possible scenarios in a stochastic global gas market model i transit of russian gas via ukraine that may be disrupted from 2020 on ii natural gas intensity of electricity generation in oecd countries that may lead to higher or lower natural gas demand after 2025 and iii availability of shale gas around the globe after 2030 we illustrate how the timing of investments is affected by inter temporal hedging behavior of market agents such as when lng capacity provides ex ante flexibility or an ex post fallback option if domestic or nearby pipeline supply sources are low moreover we find that investment in lng capacities is more determined by demand side pull due to higher needs in electric power generation than by supply side push e g higher shale gas supplies needing an outlet we focus on europe north america and china that are the world s most important gas consuming and supplying regions

trading human rights how preferential trade agreements influence government repression a growing number of preferential trade agreements ptas have come to play a significant role in governing state compliance with human rights when they supply hard standards that tie material benefits of integration to compliance with human rights principles ptas are more effective than softer human rights agreements hras in changing repressive behaviors ptas improve members human rights through coercion by supplying the instruments and resources to change actors incentives to promote reforms that would not otherwise be implemented i develop three hypotheses 1 state commitment to hras and 2 ptas supplying soft human rights standards not tied to market benefits do not systematically produce improvement in human rights behaviors while 3 state commitment to ptas supplying hard human rights standards does often produce better practices i draw on several cases to illustrate the processes of influence and test the argument on the experience of 177 states during the period 1972 to 2002 i would like to thank mike colaresi dan drezner david lake lisa martin walter mattli john meyer mark pollack erik voeten jim vreeland and two anonymous reviewers for their detailed and thoughtful comments on various drafts of this manuscript as well as the many other people who have helped me by asking hard questions along the way i would also like to thank michael barnett charles franklin and jon pevehouse for advice during the dissertation research that supports this article and alexander h montgomery for assistance in data management all faults are my own for generous assistance in the collection of data i thank the national science foundation ses 2cdz414 and ses 0135422 john meyer and francisco ramirez for support during the writing of the article i thank nuffield college at oxford university and most importantly lynn eden and stanford s center for international security and cooperation

design in context existing international agreements and new cooperation this research note highlights an important element missing from rational design theories of international agreements institutional context the presence or absence of existing and prior agreements between prospective partners in new cooperation if as rational design theorists argue agreement design is deliberate strategic and directed toward enhancing contracting parties ability to credibly commit to future cooperation then prior design successes should influence the terms of additional cooperation we test for this omitted variable problem in three agreement design outcomes ex ante limitations on agreement duration exit clauses and dispute settlement provisions through an augmentation and reanalysis of data from a key study in the rational design literature barbara koremenos s contracting around international uncertainty we show institutional context is positively correlated with inclusion of ex ante time limitations in negotiated agreements and negatively correlated with the inclusion of exit clauses and third party dispute settlement provisions institutional context also mediates and conditions the effects of the explanatory variable at the heart of existing rational design theories uncertainty about the future distribution of gains from cooperation our findings show that the collective appeal of particular design features varies not only with the nature of underlying strategic problems but also with degrees of shared institutional context

international law and domestic institutions reconciling north american unfair trade laws while scholars have written much about the role played by international institutions in cooperative behavior among nations they have not examined the domestic political motives that may lie behind nations decisions to join such organizations two level games analysis provides a framework for studying domestic politics not as a constraint upon nations that enter into international agreements but as a catalyst for nations to enter into agreements the dispute settlement procedures of the north american free trade agreement and its predecessor the canada u s free trade agreement offer an empirical illustration of this point

guns butter and anarchy a state in the international system implicit in realism must allocate its limited resources between satisfying its intrinsically valued ends and the means of military power i formalize this guns versus butter problem in a simple infinite horizon model in which two states must continually decide how to allocate their resources and whether to attack the other state the analysis establishes sufficient conditions to ensure the existence of an equilibrium in which neither state attacks shows that there is a strictly pareto dominant pair of peaceful equilibrium payoffs characterizes the unique peaceful markov perfect equilibrium that yields them and describes the comparative statics of the equilibrium allocations more broadly the analysis also suggests that the notion of anarchy has little if any substantive significance distinctively related to international politics and that the problem of absolute and relative gains is superfluous

domestic capacity and the implementation gap in regional trade agreements regional trade agreements rtas all over the world share many of the same institutional features from dispute settlement mechanisms to legalized language to escape clauses and espouse many of the same goals but many of those features are unimplemented in different contexts across the world many observers have pointed to an implementation gap in rtas most of which promise much but deliver relatively little but offer no explanation for this gap i argue that this is explained by domestic capacity in countries where the rule of law is weak and infrastructure is insufficient and particularly when those elements interact it is difficult to implement trade agreements this article utilizes expert survey data to demonstrate that member states with poor infrastructure and little respect for the rule of law are unable to carry out the obligations they agree to in their trade agreements domestic capacity both physical and institutional can explain the implementation gap between what agreements promise and wh

is china s natural gas market globally connected abstract the rise of the shale gas industry and the need for clean low carbon energy transformation in china has meant that the relationship between domestic and foreign natural gas markets has become closer therefore identifying the changing relationships between the major global natural gas markets and china s natural gas market has important practical value for the current chinese domestic natural gas pricing system this paper used the dcc garch nardl ardl ecm as the analytical framework to study these relationships from which it was found that there was no unified global natural gas market and that china s natural gas market was not yet aligned with this market it was shown that there was no significant asymmetry in the impact of international gas prices on china s gas prices as no flexible adjustment measures were found in china s imported natural gas pricing mechanism moreover while international natural gas prices were found to have a significant impact on china s natural gas prices over the long term there were obvious regional differences over the short term accordingly new pricing policies should be designed to promote market oriented natural gas pricing reforms in acknowledging features such as asymmetry the difference between imported gas sources and the periodicity of price adjustment

natural gas pricing reform in china getting closer to a market system the authros are thankful to industry representatives in china shell cnpc for their valuable contribution regarding natural gas information the mit joint program on the science and policy of global change where the authors are affiliated is supported by the u s department of energy office of science under grants de fg02 94er61937 de fg02 08er64597 de fg02 93er61677 de sc0003906 de sc0007114 xeu 0 9920 01 the u s department of energy oak ridge national laboratory under subcontract 4000109855 the u s environmental protection agency under grants xa 83240101 pi 83412601 0 rd 83427901 0 xa 83505101 0 xa 83600001 1 and subcontract uta12 000624 the u s national science foundation under grants ags 0944121 efri 0835414 iis 1028163 eccs 1128147 arc 1203526 ef 1137306 ags 1216707 and ses 0825915 the u s national aeronautics and space administration under grants nnx06ac30a nnx07ai49g nnx11an72g and sub agreement no 08 sfws 209365 mit the u s federal aviation administration under grants 06 c ne mit 09 c ne mit agmt no 4103 30368 the u s department of transportation under grant dtrt57 10 c 10015 the electric power research institute under grant ep p32616 c15124 ep p8154 c4106 the u s department of agriculture under grant 58 6000 2 0099 58 0111 9 001 and a consortium of 35 industrial and foundation sponsors for the complete list see http globalchange mit edu sponsors all

the security dilemma revisited robert jervis s article cooperation under the security dilemma is among the most important works in international relations of the past few decades in it jervis develops two essential arguments first he explains that the security dilemma is the key to understanding how in an anarchic international system states with fundamentally compatible goals still end up in competition and at war the security dilemma exists when many of the means by which a state tries 1 to increase its security decrease the security of others it provides the rational foundation for what jervis termed the spiral model which describes how the interaction between states that are seeking only security can fuel competition and strain political relations 2 second jervis explains that the magnitude and nature of the security dilemma depend on two variables the offense defense balance and offense defense differentiation 3 as a result the security dilemma can vary across space and time although states exist in a condition of international anarchy that does not vary there can be significant variation in the attractiveness of cooperative or competitive means the prospects for achieving a high level of security and the probability of war

absolute and relative gains in international relations theory the problem of absolute and relative gains divides neoliberal institutionalism and structural realism the former assumes states focus primarily on their absolute gains and emphasizes the prospects for cooperation the latter supposes states are largely concerned with relative gains and emphasizes the prospects for conflict existing work in international relations theory generally traces the differences between these two theories to different assumptions about states preferences using a simple game theoretic model this essay offers a reformulation of the problem of absolute and relative gains that links changes in the states behavior the feasibility of cooperation and especially the states concern for relative versus absolute gains explicitly to changes in the constraints facing the states many of the differences between neoliberal institutionalism and structural realism appear as special cases of the model

lng is linking regional natural gas markets evidence from the gravity model abstract evidence exists that global natural gas markets have become more integrated over time one possible explanation for this increased level of integration is that increased liquefied natural gas trade has increased the opportunity for price arbitrage by decreasing transport costs if this explanation is true then the natural gas market should become relatively more integrated because countries separated by large distances would be more willing to trade with each other we employ a gravity model to test whether trade in liquefied natural gas has helped to de regionalize the total natural gas market using trade in the compressed natural gas market as a comparison benchmark the results indicate that liquefied natural gas is indeed a global commodity whereas the compressed natural gas markets are more regional importantly we find that trade in liquefied natural gas has de regionalized the total natural gas market

analysis of resource potential for china s unconventional gas and forecast for its long term production growth abstract china is vigorously promoting the development of its unconventional gas resources because natural gas is viewed as a lower carbon energy source and because china has relatively little conventional natural gas supply in this paper we first evaluate how much unconventional gas might be available based on an analysis of technically recoverable resources for three types of unconventional gas resources shale gas coalbed methane and tight gas we then develop three alternative scenarios of how this extraction might proceed using the geologic resources supply demand model based on our analysis the medium scenario which we would consider to be our best estimate shows a resource peak of 176 1 billion cubic meters bcm in 2068 depending on economic conditions and advance in extraction techniques production could vary greatly from this if economic conditions are adverse unconventional natural gas production could perhaps be as low as 70 1 bcm peaking in 2021 under the extremely optimistic assumption that all of the resources that appear to be technologically available can actually be recovered unconventional production could amount to as much as 469 7 bcm with peak production in 2069 even if this high scenario is achieved china s total gas production will only be sufficient to meet china s lowest demand forecast if production instead matches our best estimate significant amounts of natural gas imports are likely to be needed

when do institutions bite historical institutionalism and the politics of institutional change historical institutionalist theories of endogenous change have enhanced our understanding of institutional development by providing a theoretical vocabulary for analyzing how institutions may be renegotiated over the long run by social and political actors in these theories however the causal impact of institutions themselves on political outcomes including their own change and reform is less developed a significant problem for an institutional research program this paper addresses this problem by proposing strategies that integrate historical institutionalism s insights into endogenous institutional change with a systematic analysis of the institutional conditions under which bottom up processes of gradual change are likely to be counteracted in particular the institutionalization of cultural categories and the allocation of power over the timing of reform within institutional and policy configurations are important variables for understanding how pre existing institutions may enable institutional incumbents to channel delay or prevent institutional change

forecasting natural gas supply in china production peak and import trends china s natural gas consumption has increased rapidly in recent years making china a net gas importer as a nonrenewable energy the gas resource is exhaustible based on the forecast of this article china s gas production peak is likely to approach in 2022 however china is currently in the industrialization and urbanization stage and its natural gas consumption will persistently increase with china s gas production peak china will have to face a massive expansion in gas imports as the largest developing country china s massive imports of gas will have an effect on the international gas market in addition as china s natural gas price is still controlled by the government and has remained at a low level the massive imports of higher priced gas will exert great pressure on china s gas price reform

rationalist explanations for war realist and other scholars commonly hold that rationally led states can and sometimes do fight when no peaceful bargains exist that both would prefer to war against this view i show that under very broad conditions there will exist negotiated settlements that genuinely rational states would mutually prefer to a risky and costly fight popular rationalist and realist explanations for war fail either to address or to explain adequately what would prevent leaders from locating a less costly bargain essentially just two mechanisms can resolve this puzzle on strictly rationalist terms the first turns on the fact that states have both private information about capabilities and resolve and the incentive to misrepresent it the second turns on the fact that in specific strategic contexts states may be unable credibly to commit to uphold a mutually preferable bargain historical examples suggest that both mechanisms are empirically plausible

openness country size and government abstract this paper shows that smaller countries have a larger share of public consumption in gdp and are also more open to trade these empirical observations are consistent with recent theoretical models explaining country formation and break up and may account for the observed positive empirical relationship between trade openness and government size

the politics of dispute settlement design explaining legalism in regional trade pacts dispute settlement mechanisms in international trade vary dramatically from one agreement to another some mechanisms are highly legalistic with standing tribunals that resemble national courts in their powers and procedures others are diplomatic requiring only that the disputing countries make a good faith effort to resolve their differences through consultations in this article i seek to account for the tremendous variation in institutional design across a set of more than sixty post 1957 regional trade pacts in contrast to accounts that emphasize the transaction costs of collective action or the functional requirements of deep integration i find that the level of legalism in each agreement is strongly related to the level of economic asymmetry in interaction with the proposed depth of liberalization among member countries

international market integration for natural gas a cointegration analysis of prices in europe north america and japan this paper investigates the degree of integration of natural gas markets in europe north america and japan in the time period between the early 1990s and 2004 the relationship between international gas market prices and their relation to the oil price are explored through principal components analysis and johansen likelihood based cointegration procedure both of them show a high level of natural gas market integration within europe between the european and japanese markets as well as within the north american market at the same time the obtained results suggest that the european respectively japanese and the north american markets were not integrated

scraps of paper agreements and the durability of peace in the aftermath of war what determines whether peace lasts or fighting resumes and what can be done to foster durable peace drawing on theories of cooperation i argue that belligerents can overcome the obstacles to peace by implementing measures that alter incentives reduce uncertainty about intentions and manage accidents a counterargument suggests that agreements are epiphenomenal merely reflecting the underlying probability of war resumption i test hypotheses about the durability of peace using hazard analysis controlling for factors including the decisiveness of victory the cost of war relative capabilities and others that affect the baseline prospects for peace i find that stronger agreements enhance the durability of peace in particular measures such as the creation of demilitarized zones explicit third party guarantees peacekeeping and joint commissions for dispute resolution affect the duration of peace agreements are not merely scraps of paper rather their content matters in the construction of peace that lasts

quality and economies of scale in higher education this study attempts to develop and empirically estimate an average cost and output reltion for average total for higher education statistical results based on data for top phd granting institutions suggest there are economies of scale in higher education academic reputation is also an important variable in explaining variations in average total cost

do intergovernmental organizations promote peace a basic debate in world politics involves the impact of intergovernmental organizations igos on international conflict liberals functionalists and others see igos as capable of transforming global anarchy while realists emphasize the essential irrelevance of igos in managing such fundamental processes as war and peace recent quantitative studies also yield disparate conclusions depending on particular econometric assumptions implying variously that igos foster pacific relations among states have no impact on dispute behavior or even increase dispute propensity at least part of the problem is a lack of theoretical and empirical specificity the authors apply bargaining theory to develop a middle path between the realist and liberal perspectives only some igos those with security mandates and the most sophisticated institutional structures are likely to influence dispute behavior the authors combine the theory with two improvements in research design first igos vary in capability mandate and cohesion the authors construct a dataset of igo institutional heterogeneity and member cohesiveness second states join igos for reasons that are not unrelated to why states fight the authors control for the level of international involvement among countries and find support for their arguments in initial tests

coordination versus prisoners dilemma implications for international cooperation and regimes the study of political institutions in general and international cooperation in particular has been beneficially influenced by the prisoners dilemma pd game model but there is a mistaken tendency to treat pd as representing the singular problem of collective action and cooperation by relaxing the assumptions of 2 2 games and developing an alternate model of the coordination game i show how some cooperation problems have very different properties from those found in pd the analytical results of the two games are compared across several important dimensions number of strategies available number of iterations of the game numbers of players and the distribution of power among them the discussion is illustrated with specific problems of international cooperation and the implications of alternative cooperation problems for the formation and performance of international regimes are explored the basic solutions for pd and coordination have divergent ramifications for the institutionalization stability and adaptability of regimes and for the role of hegemony in the international system however the coordination model does not replace the pd model but complements and supplements it as a way to understand the diversity of political institutions these results are widely applicable to areas of politics beyond international relations

three s a crowd third parties and wto dispute settlement in spite of the recent failure of two referendums the drafting of a constitution for the second biggest economic power in the world the european union eu remains a major event in the history of european integration whether the constitution or a revised version of it will come into force or not several important questions emerge how did an increased number of twenty five member states reach a conclusion whereas a lower number of fifteen had failed at previous intergovernmental attempts in particular how did the constitutional convention differ from previous intergovernmental conferences igcs at which the eu exclusively bargained its treaty documents in the past how can one explain the outcomes of the convention which proposes redistribution of power and resources among twenty five or more member states this article uses the positions of the delegates of the eu s constitutional convention to examine bargaining in a setting with few formal rules the authors use theoretical insights from a spatial model and new survey data to determine the implicit voting rule used at the convention they find that the convention differed from previous igcs because the convention was governed by consensus whereas previous eu bargains on treaties had always required unanimous support the level of consensus was higher than simple majority rule but lower than unanimity since this threshold impacted who won and who lost at the convention the authors also examine the sources of bargaining power such as delegates distance to the status quo distance to the median population size and domestic constraints the results confirm several findings in the eu bargaining and two level game literature for example that actors closer to the status quo hold a stronger bargaining position and that actors from larger member states are neither more likely nor less likely to win at the negotiating table than are actors from smaller states the findings on the irrelevance of domestic constraints also indicate why the popular votes in france and the netherlands failed

research bets and behavioral ir behavioral ir faces a fundamental challenge the actors in most ir models and theories are not individuals they are aggregates like states ministries interest groups political parties and rebel factions there are two broad approaches to attempting to integrate behavioral research about individuals the first a quasi behavioral approach makes nonstandard assumptions about the preferences beliefs or decision making processes of aggregate actors the second tries to build theories in which the key actors are individuals pursuing the former means that the assumptions about actors will be only weakly linked to the empirical findings propelling behavioral research the second approach faces formidable obstacles that international relations theory has confronted for a long time and for the most part has not overcome

the structure and dynamics of eu federalism this article analyzes european union eu politics through the lens of comparative federalism the article assesses the contributions that rationalist and constructivist approaches can make to the analysis of eu federalism focusing on two broad questions first what explains shifts in authority from the state i e member states to the federal i e eu level second what explains the degree to which the federal government constrains state discretion this article develops testable hypotheses based on the rationalist and constructivist perspectives and presents a set of initial plausibility probes the article shows that there is considerable room for dialogue between rationalist and constructivist perspectives and together they can provide a more comprehensive explanation for the dynamics of eu federalism

natural gas in asia trade markets and regional institutions natural gas trade in asia has been dominated by long established market structures under which liquefied natural gas lng has remained indexed based on the price of crude oil high transaction costs in the region in recent years imply that the regional market is sub optimally organized since 2010 the continued prevalence of oil indexation has had the most adverse effect on japan the world s largest lng importer in response japan implemented several strategies to challenge traditional lng pricing mechanisms in the region and ultimately reduce transaction costs japan s efforts include an increase in the share of spot and short term purchases sourcing new supplies from the united states under alternative pricing arrangements and driving regional buyer cooperation this paper evaluates the potential effect of japan s lng strategy on regional pricing in the broader institutional context arguing that lng pricing in the region will only partially shift away from oil indexation by the end of the decade while recent cooperation among regional lng importers indicates that there may be scope for change in the regional institutional setting the degree of cooperation is insufficient to have a profound effect on regional pricing

relative gains and the pattern of international cooperation many political situations involve competitions where winning is more important than doing well in international politics this relative gains problem is widely argued to be a major impediment to cooperation under anarchy after discussing why states might seek relative gains i demonstrate that the hypothesis holds very different implications from those usually presumed relative gains do impede cooperation in the two actor case and provide an important justification for treating international anarchy as a prisoner s dilemma problem but if the initial absolute gains situation is not a prisoner s dilemma relative gains seeking is much less consequential its significance is even more attenuated with more than two competitors relative gains cannot prop up the realist critique of international cooperation theory but may affect the pattern of cooperation when a small number of states are the most central international actors

the relative gains problem for international cooperation modern realism claims that the fear that others will enjoy relatively greater benefits frequently impedes international cooperation recent articles in this review by duncan snidal and robert powell modeled conditions under which the impact of relative gains varied joseph grieco criticizes snidal s model as based on assumptions that allow him to avoid rather than confront the realist arguments he also argues that powell s model while constructive ignores important additional sources of sensitivity to relative gains in response powell discusses the value of alternative assumptions about preferences and constraints in international relations snidal defends his analysis and presents an additional proof to support the independence of his central result the diminishing impact of relative gains with increasing numbers of states from assumptions of concern to grieco both responders emphasize their work as contributing to a contextually rich theory of international politics that builds on elements of both realism and neo liberalism

how does coal price drive up inflation reexamining the relationship between coal price and general price level in china abstract due to the coal dominated energy structure china is currently facing significant economic uncertainties brought forward by instability of coal price by separating the asymmetric effects that how upward and downward coal price changes pass through to the economy this paper reexamines the relationship between coal price and general price level in china the asymmetric effects are investigated via vector autoregression models granger causality tests and impulse response function analyses using the monthly time series data from jun 98 to sep 14 results show negative coal price change presents more significant impact on inflation than positive one the inflation responses very abruptly to coal price shock in the short run but the impact regresses rapidly along time accumulatively a 1 increase of coal price will push cpi and ppi up by 0 04 and 0 12 while a 1 decrease of coal price will pull them down by 0 08 and 0 17 respectively the linkage among coal price change ppi and cpi is demonstrated as the main transmission channel of price shock the inflationary effect is strong in the initial stage but will be weakened in the later stage since the pass through effect from ppi to cpi is tiny which confirms ppi is more responsive than cpi to coal price change for policy implications how to avoid extreme volatility in general price level is a major concern of recent agendas such as reforming energy market and building green fiscal system

power and interdependence revisited ten years ago we published power and interdependence 1 the passage of a decade makes this an appropriate time to reread and reevaluate that book and to take stock of the research program to which it contributed in doing this we hope to deepen and enrich scholarly understanding of the politics of interdependence and to stimulate reflection on directions for the field of international relations over the next decade 2 such a reappraisal seems particularly opportune given the changes in world politics and especially in american policy that have marked the intervening years stanley j michalak commented in 1979 that the authors may cringe from the analogy but power and interdependence may well become the politics among nations of the 1970s 3 but from the perspective of the late 1980s the world may look different while the 1970s were seen as the decade of interdependence many observers regard the use of force and concern for security as characteristic of the 1980s indeed the view is widespread in some circles that the 1980s resemble the 1950s more than the 1970s and that hans j morgenthau s work is more relevant to contemporary issues of world politics than power and interdependence

the impact of degree programmes on university expenditure this research examines the impact of the number and mix of academic degree programmes on university operating expenditure in the united states statistical results are based on data for doctoral and research institutions without medical schools after controlling for other factors influencing expenditure additional degree programmes are associated with significant increases in expenditure with doctoral programmes having a 40 higher marginal impact on total expenditure than baccalaureate programmes most institutions are found to be smaller than the expenditure minimizing size and to have higher expenditure per full time equivalent student as specified the models explain a large amount of the variation in expenditure across the institutions

explaining variation in the use of european litigation strategies european community law and british gender equality policy through the examination of one of the most successful cases of a european community ec law litigation strategy this article develops a general framework for understanding when and how the ec legal system will be successfully used by domestic groups to challenge national policy the authors show how the european legal system actually shifted the domestic balance of power in favor of equality actors allowing a previously weak domestic group to influence the united kingdom s gender equality policy at the height of conservative party rule expanding beyond the british case the article develops a series of hypotheses about when the ec legal tool is likely to be used by groups to influence national policy hypotheses that could account for cross national variation in the impact of european court of justice jurisprudence on domestic policy in areas outside of equality policy

global communications and national power life on the pareto frontier regime analysis has focused on issues of market failure the resolution of which depends upon knowledge and institution building global communications regimes however have been concerned either with issues of pure coordination or with coordination problems with distributional consequences outcomes have been decided by the underlying distribution of national power in those areas where power was asymmetrically distributed and there was no agreement on basic principles and norms radio broadcasting and remote sensing no regime was formed in those areas where distributional issues could not be unilaterally resolved allocation of the radio spectrum and telecommunications regimes were created although both principles and rules changed with alterations in national power capabilities

gas and lng trading hubs hub indexation and destination flexibility in east asia abstract in the east asian gas markets issues like gas trading hubs hub indexed pricing and destination flexibility are being debated this paper examines the impact of a change in east asia s pricing benchmark and contract flexibility on the regional and global gas markets the paper uses the nexant world gas model a linear program with global cost minimization as the objective to our knowledge this study on hub competition price benchmark change and contract flexibility improvement in east asia will be the first in the literature and have real policy relevance the results show that both price benchmark change and contract flexibility improvements will create an overall benefit for the world and east asia importers but the impacts are different among exporters and importers however there is no evidence of competition among different benchmark hubs and no evidence that destination restrictions cause the asia premium it implies that removal of destination clauses has higher priority than the change to hub indexation for japan korea and chinese taipei but both should be treated equally in china the study also suggests that east asian importers should cooperate among themselves and with exporters to facilitate the hub creation and contract changes in east asia

invested interests the politics of national economic policies in a world of global finance capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history this article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking it begins by emphasizing that while financial markets are highly integrated within the developed world many investments are still quite specific with respect to firm sector or location it then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups over the long run increased capital mobility tends to favor owners of capital over other groups in the shorter run owners and workers in specific sectors in capital exporting countries bear much of the burden of adjusting to increased capital mobility these patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration the article then demonstrates that capital mobility also affects the politics of other economic policies most centrally it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument in this context it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability similarly it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one these divisions have important implications for such economic policies as european monetary and currency union the dollar yen exchange rate and international macroeconomic policy coordination