structural gaiatsu international finance and political change in japan argues that the principal contributor to changes in japan s political economy is the decline of japanese governmental control over capital flows and foreign exchange rates brought about by structural gaiatsu or direct foreign pressure differs from previous analysis of gaiatsu by arguing that international capital and market forces generate gaiatsu not foreign governments and that its influence has been worldwide as well as deeper and more ongoing than bilateral negotiating sessions and joint communiques related to trade discusses how the change has catalyzed a major increase in foreign direct investment by japanese owned corporations a reduction in government s ability to control corporate behavior a diminution of intra corporate linkages conflict within national economic policies and the increased penetration of the japanese economy by foreign financial institutions describes how the change has resulted in an emerging socio economic gap in japan between individuals groups and organizations demonstrates how the japanese experience suggests the transformative power of global capital markets on national political economies particularly those that have been interventionist in nature

great expectations financialization and bank bailouts in democracies accelerating financialization and rising societal wealth have meant that democratic governments increasingly provide bailouts following banking crises using a new long run data set we show that despite frequent and virulent crises before world war ii bank bailouts to protect wealth were then exceptionally rare in recent decades by contrast governments have increasingly opted for extensive bailouts well before the major interventions of 2007 2009 we argue that this policy shift is the consequence of the great expectations of middle class voters overlooked in existing accounts associated with the growing financialization of wealth rising leverage and accumulating ex ante financial stabilization commitments by governments these expectations are suggestive of substantially altered policy preferences and political cleavages since the 1970s when severe banking crises returned as an important threat to middle class wealth this pressure from below has led elected governments to provide increasingly costly bailouts with no historical precedent

third world indebted industrialization international finance and state capitalism in mexico brazil algeria and south korea the past fifteen years have seen two important developments in the international economic system the rapid industrialization of many less developed countries ldcs and their increasing indebtedness to private financial institutions massive bank loans have been used to fund industrial growth in many ldcs international financial markets have replaced multinational corporations as the third world s most important source of private foreign capital in four major borrowing countries mexico brazil algeria and south korea the process of indebted industrialization has its roots in the internationalization of finance the increasing role of the state and the use of funds raised on the international capital markets to finance industrial development the results include rapid expansions of ldc industrial production and ldc exports of manufactured products as well as the formation of an implicit partnership between private financial institutions and state capitalist elites in the third world

partisan governments the international economy and macroeconomic policies in advanced nations 1960 93 this article examines the impact of parties domestic institutions and the international economy on the conduct of monetary and fiscal policies using time series cross section data from nineteen oecd countries for the years between 1960 and the mid 1990s the results are as follows partisan governments have affected alone and in interaction with the organization of labor markets the pattern of macroeconomic management still their impact has varied over time partly as a function of economic conditions but fundamentally as a function of the degree of financial liberalization and the exchange rate system in place after following broadly similar macroeconomic policies in the 1960s oecd governments pursued divergent monetary and fiscal policies in response to the economic slowdown of the 1970s even when they initially adopted countercyclical measures conservative governments quickly favored tight monetary policies and strove to achieve fiscal discipline by contrast taking advantage of generalized capital controls and floating exchange rates socialist cabinets embraced demand management policies in a systematic fashion mostly through budget deficits in corporatist countries and through both loose monetary and loose fiscal measures in noncorporatist settings as financial liberalization progressed in the early 1980s partisan and institution led differences in macroeconomic policies waned across countries

total factor productivity and the measurement of technological change tfp is interpreted in the literature in different mutually contradictory ways changes in tfp are shown to measure not technological change only the super normal returns to investing in such change returns that exceed the full opportunity cost of the activity thus in the limit technological change can proceed with unchanged tfp measuring the effects of technological change instead requires counterfactual estimates reasons why changes in tfp are imperfect measures of super normal returns are also studied reasons connected with the timing of output responses the treatment of r d in the national accounts the omission of resource inputs and two types of aggregation la productivite totale des facteurs et la mesure du changement technologique la productivite totale des facteurs ptf est interpretee dans la litterature de manieres differentes et mutuellement contradictoires on montre que les changements dans la ptf ne mesurent pas le changement technologique mais seulement les rendements supra normaux sur les investissements dans de tels changements des rendements qui depassent le plein cout d opportunite de cette activite donc a la limite le changement technologique peut proceder sans que la ptf change mesurer les effets du changement technique reclame des evaluations d hypotheses de rechange les raisons pour lesquelles les changements dans la ptf sont des mesures imparfaites des rendements supra normaux sont aussi etudiees raisons connectees avec la reponse des niveaux de production le traitement de la r d dans les comptes nationaux l omission des intrants de ressources et deux types d agregation

how do crises lead to change liberalizing capital controls in the early years of new order indonesia how do crises lead to change rationalist approaches to the question that emphasize inexorable structural responses and the pursuit of distributive preferences by newly dominant coalitions are inadequate because they obscure the social mediation of material events and the pervasive uncertainty that follows destabilization of the precrisis status quo the latter constrains actors from fully grasping their distributive preferences until uncertainty is reduced persuasion emerges as a key mechanism of change although constructivist approaches emphasize persuasive practices they have yet to adequately specify the scope conditions underpinning the selection of new ideas this article goes beyond much of the constructivist focus on domestic legitimacy and static notions of resonance by emphasizing external credibility and dynamic processes of resonance building by norm entrepreneurs the author specifies four features what he calls the four cs of crisis resolution that shape the process of idea selection carriers composition crossover appeal and credibility developing these arguments in the case of the early years of new order indonesia the article suggests that whenever a prominent and cohesive group of advocates promotes an idea that has sufficient ideational and distributive appeal and the endorsement of external actors whose seal of approval is perceived as important intersubjective belief change and thus institutional and policy change is more likely

exchange rates and industry demands for trade protection the recent confrontation between china and the united states over currency policy illustrates a broader phenomenon exchange rate misalignments tend to spill over into trade policy although previous studies have shown that aggregate protectionist activity is positively related to the level of the real effective exchange rate we explore this relationship at the industry level several industry specific characteristics determine the protectionist response to exchange rate changes including the degree of exchange rate pass through the level of import penetration and the share of imported intermediate inputs in total industry inputs we find that the marginal effect of currency appreciation on the number of industry level antidumping petitions is positive and significant only for industries with high pass through therefore exchange rates appear to induce demands for trade barriers only in industries where competitiveness is directly harmed by currency appreciation

ideas versus resources explaining the flat tax and pension privatization revolutions in eastern europe and the former soviet union this article examines the rapid spread of pension privatization and the flat tax in former communist countries to understand why new policy ideas take hold and to elucidate the role played by mater

externalities technological complementarities and sustained economic growth externalities as conventionally defined miss many of the spillovers that are both causes and consequences of the technological changes that underlie economic growth we introduce a much wider concept called technological complementarities new general purpose technologies gpts rejuvenate the growth process by creating technological complementarities which are adequately measured neither by total factor productivity tfp nor by externalities there would be major gains from technological change even if the returns on capital invested in innovation never exceeded the returns on investing in existing technologies so that there were neither externalities nor positive changes in tfp

societal preferences partisan agents and monetary policy outcomes if different producer groups have divergent interests concerning macroeconomic policies how do societal preferences translate into state policy outcomes i develop and test a party as agent framework for understanding the importance of societal preferences with regard to monetary policy under capital mobility following the principal agent model political parties function as agents for different societal principals rightist parties tend to represent internationally oriented business groups with preferences for monetary convergence while leftist parties do the same for domestically oriented groups preferring monetary autonomy under capital mobility i present statistical evidence showing that oecd leftist governments have been associated with more monetary autonomy and currency variability than their rightist counterparts even after controlling for basic economic indicators such as inflation the statistical evidence also shows that societal group size tends not to explain either autonomous monetary policy choices or exchangerate stability thus even large and wealthy societal groups may be unable to obtain their preferred policy outcome when their respective partisan agents do not hold government power

partisanship and the path to financial openness the effect of traditional left right economic preferences on countries international financial openness is more subtle than existing studies have recognized the authors investigate the role that partisan politics played in the liberalization of international financial markets within 12 western european democracies from 1960 to 1986 the authors find that right governments tended to be active liberalizers of the capital account they were more likely than left governments to enact liberalizations and liberalizations were especially likely when new right governments entered office left governments typically acquiesced to these changes although less likely to enact liberalizations they were no more likely to impose new restrictions the authors findings are consistent with studies that show how financial integration does not undermine welfare states but is still subject to partisan contention

animal spirits as an engine of boom busts and throttle of productivity growth abstract the news shock literature interprets empirical news shock identifications as signals about future productivity under this view changes in productivity cause changes in expectations i investigate an alternative interpretation whereby changes in expectations cause changes in productivity i present a model where firms adopt the technology of a deterministic frontier and where self fulfilling expectational shocks unleash a frenzy of adoption through which firms increase productivity consistent with the news evidence stock prices and aggregate activity boom yet tfp increases with a lag simulations using i i d expectational shocks yield moments consistent with the data and qualitatively capture both high frequency boom busts and lower frequency fluctuations finally estimating a beaudry portier style vecm on the simulated model output to identify a news shock recovers impulse response functions largely consistent with the beaudry and portier 2006 results

globalization and the autonomy of domestic competition policy an empirical test on the world airline industry the globalization literature questions national autonomy in a world where mnes spur increased international flows of capital and trade this paper empirically tests whether globalization undermines the autonomy of domestic airline competition policy a comprehensive panel data set covering twenty one nations over the 1983 92 period yields two major findings 1 globalization undermines domestic airline competition policy autonomy 2 government institutions mediate globalization s impact

political parties and monetary commitments we argue that political parties will choose monetary institutions in order to help them win elections and retain office increased levels of economic openness in the industrial democracies have complicated the pursuit of office by altering the policy preferences of constituents and decreasing the ability of cabinet ministers to deliver promised economic outcomes we contend that monetary commitments can help political parties manage diverse constituent interests restore policy effectiveness and ultimately maintain their position in office therefore we expect that fixed exchange rates and central bank independence can improve cabinet durability especially under conditions of economic openness in the first section we discuss how fixed exchange rates and central bank independence can insulate cabinets from the political shocks of increased economic openness to determine the political value of these commitments we then test the effect of exchange rate commitments and central bank independence on cabinet durability in the second section in the third section we use the results of our statistical models to generate expected cabinet durability for the countries in our sample under alternative institutional configurations by comparing the expected durabilities we show that most monetary reforms have helped or at least not hurt expected cabinet durability

political capital mexican financial policy under salinas market reform is advocated in developing countries to improve economic efficiency and prevent privileged groups from obtaining rents from the policy making process yet this prescription fails to address the complex political process that governments are likely to confront when moving toward the market this study shows how political considerations during president salinas s administration distorted economic reform in mexico during the 1990s mexican finance policy contradicted the government s declared neoliberal principles while the banks were reprivatized and deregulated they were also given a high degree of protection from competition enabling the new owners to charge excessive interest rates in addition the government artificially inflated the value of the currency through exchange rate intervention these contradictory policies are best understood as a coherent political response to the electoral vulnerability of the ruling party pri at the end of the 1980s when viable political opposition threatened the pri s ability to maintain power it responded by using financial policies to distribute economic benefits to social groups particularly business the middle class and the poor whose support was critical for electoral victory

exchange rate proclamations and inflation fighting credibility if governments choose economic policies that often run counter to their public commitments are those commitments meaningless we argue that govern ment proclamations can be critical in signaling economic policy intentions we focus on the realm of exchange rate policy in which countries frequently implement an exchange rate regime that differs from the officially declared regime we argue that the official exchange rate regime is one of the most important signals of a government s economic policy preferences when a government makes a de jure public commit ment to a fixed exchange rate it sends a signal to domestic and international markets of its strict monetary policy priorities in contrast a government that proclaims a floating exchange rate signals a desire to retain discretion over monetary policy even if it has implemented a de facto fixed rate we use data on 110 developed and devel oping countries from 1974 to 2004 to test two hypotheses first that governments that adopt de facto fixed exchange rates will experience less inflation when they back up their actions with official declarations and second that governments that abide by their commitments as demonstrated by a history of following through on their public declarations of a fixed exchange rate regime will establish greater inflation fighting credibility within developing countries democratic institutions enhance this credibility results from fixed effects econometric models provide strong support for our hypotheses

the political economy of international trade enduring puzzles and an agenda for inquiry a similar set of concepts has been central to the literatures on the formation of trade policy coalitions and the new economics of institutions the political and economic consequences of the degree to which assets are specific to a particular economic activity in this survey the authors take the necessary first step of summarizing the main findings of these two literatures and then suggest ways in which the issue might be joined in addition to providing a more coherent understanding of the findings of these two literatures and some new directions for them the authors show that many puzzles remain in the field of trade politics puzzles for which there are no appealing answers or where there are answers no strong evidence in support of them this essay then in addition to being a theoretical review of the literature puts forward an agenda for future study of international trade politics

the origins of financial openness a study of current and capital account liberalization theory we assess the determinants of the national regulation of international finance or the comparative degree of national financial openness or closure hypotheses partisanship interacts with a nation s factor endowments to account in part for different international financial policies by governments of the same partisan hue methods we offer a quantitative measure of international financial openness or current and capital account regulation for 21 member countries of the organization for economic cooperation and development for 1950 88 we use regression analysis employing panel corrected standard errors to discover the determinants of financial openness results our main finding is that political partisanship substantially explains openness but does so in complex ways differences in both political institutional arrangements and types of political economy also account for part of the differences in international financial regulation

growth volatility and financial liberalization we examine the effects of both equity market liberalization and capital account openness on real consumption growth variability we show that financial liberalization is mostly associated with lower consumption growth volatility our results are robust surviving controls for business cycle effects economic and financial development the quality of institutions and other variables countries that have more open capital accounts experience a greater reduction in consumption growth volatility after equity market openings we also find that financial liberalizations are associated with declines in the ratio of consumption growth volatility to gdp growth volatility suggesting improved risk sharing our results are weaker for liberalizing emerging markets but we never observe a significant increase in real volatility moreover we demonstrate significant differences in the volatility response depending on the size of the banking and government sectors and certain institutional factors

the great reversal in the demand for skill and cognitive tasks this paper argues that several of the poor labor market outcomes observed in the great recession can be traced back to a change in the demand pattern for skilled workers that started with the tech bust of 2000 in particular we show that around the year 2000 the demand for cognitive tasks underwent a reversal in response high skilled workers moved down the occupational ladder and increasingly displaced lower educated workers in less skill intensive jobs while these effects were present before the financial crisis of 2008 they became more obvious after jobs associated with the housing bubble disappeared

the political obstacles to greater exchange rate flexibility in china summary an undervalued currency has arguably helped china pursue an east asian style export led model of development spurring economic growth and job creation recently however the undervalued exchange rate has exposed china to a raft of growing major financial and economic vulnerabilities including an overheating of the domestic economy and renewed financial sector difficulties despite these risks chinese leaders have refused to significantly revalue the renminbi suggesting that political objectives are taking precedence over economic optimality i aim to glean insight into such political explanations by building upon present theories in political economy

real exchange rate overvaluation and wto dispute initiation in developing countries why and when do developing countries file trade disputes at the world trade organization wto although financial conditions have long been considered an important driver of trade policy they have been largely absent from the literature on trade disputes we argue that developing country governments bring more trade dispute to the wto when overvalued real exchange rates put exporters at a competitive disadvantage this dynamic is most prevalent in countries where large foreign currency debt burdens discourage nominal currency devaluations that would otherwise serve exporters interests our findings provide an explanation for differences in dispute participation rates among developing countries and also suggest a new link between exchange rate regimes and trade policy

power and the control of capital this essay reviews three recent books on the political economy of finance in postcolonial asia and latin america and suggests a framework for examining the relationship between political power and varying patterns of control over investment resources the stress is on the constraints different controllers of capital can impose on state leaders the conditions under which policymakers can subvert these constraints and how conflicts within the state over the trajectory of policy are mediated by who or what supplies critical investment resources and the institutional channels through which the resources flow

what you want depends on what you know firm preferences in an information age information has become a core input for many companies this article examines how this affects firm policy preferences in contrast to national typologies of capitalism or microeconomic expectation

revisiting the single european act and the common wisdom on globalization the european program of liberalization launched by the single european act sea of 1987 is commonly seen as a powerful instance of globalization trends of economic integration liberalization and international institution building this article revisits the origins of the sea to argue that the extent and success of its liberalizing program depended on a causally distinct push for european institutional reform a retracing of concrete political patterns behind the sea greatly strengthens broader statistical and theoretical challenges to the notion of strong universal trends of globalization

democratic institutions and exchange rate commitments since the collapse of the bretton woods system countries have been able to choose from a variety of exchange rate arrangements we argue that politicians incentives condition the choice of an exchange rate arrangement these incentives reflect the configuration of domestic political institutions particularly electoral and legislative institutions in systems where the cost of electoral defeat is high and electoral timing is exogenous politicians will be less willing to forgo their discretion over monetary policy with a fixed exchange rate in systems where the costs of electoral defeat are low and electoral timing is endogenous politicians are more likely to adopt a fixed exchange rate regime consequently differences in domestic political systems can help account for variations in the choice of exchange rate arrangements we test this argument using constrained multinomial logit and binomial logit on a sample of twenty democracies over the period 1974 95 domestic political institutions have a significant effect on exchange rate regime choice even after controlling for systemic macroeconomic and other political variables

leaning right and learning from the left diffusion of corporate tax policy across borders there is an increased focus in comparative politics and international relations on how choices of governments are dependent on choices made by other governments the authors argue that although the relationship between policy choices across countries is often labeled as either diffusion or competition in many cases the theoretical mechanisms underpinning these labels are unclear in this article the authors build a model of social learning with a specific application to the diffusion of corporate tax reductions the model yields predictions that are differentiable from existing models of tax competition specifically the authors argue that social learning is most likely in the wake of tax policy cuts by left governments they test the model using an existing data set of corporate tax rate changes and an author created data set of changes in tax legislation covering 20 organisation for economic co operation and development countries the authors empirical findings show that social learning is an important determinant of corporate tax policy making

bourgeois revolutions the policy consequences of resurgent conservatism much of the literature on reform politics has focused on social democratic governments this article reexamines the dynamics of reform by concentrating on conservative governments in four advanced

voting for change calculation community and euro referendums referendum votes on adoption of the euro in denmark 2000 and sweden 2003 provide unprecedented natural experiments through which to study the political economy of money using exit polling data and multinomial logit statistical models that allow us to separate preferences for the euro from preferences for the european union eu we test economic calculation and political community as determinants of individual level preferences over adoption of the euro we find that calculation operates most clearly where as in sweden the choice of a fixed versus a floating exchange rate regime is at stake while community exerts strong effects across the two cases we would like to thank krister andersson jerry cohen robert fishman jennifer fitzgerald jeff frieden eric helleiner jacques hymans lars jonung kate mcnamara jennifer wolak and the anonymous reviewers for helpful comments and helga sverrisdottir for outstanding research assistance we are grateful to jens wagner of the danish data archive and torbja rn berglund of the swedish social science dataservice for providing the data used in this note neither these individuals nor their respective agencies are responsible for the interpretations contained herein

gpt driven endogenous growth seven years after helpman s 1998 book on general purpose technologies gpts there is a dearth of subsequent models early models employed technically complex dynamic optimising techniques which limited further development we present a model in which sustained growth is driven by a succession of gpts that is technically simpler than the early models yet captures stylised facts that were omitted from them ours has diminishing returns to inputs and endogenous incremental technological changes from r d interrupted by the occasional introduction of new gpts gpts are themselves developed endogenously with payoffs that are subject to uncertainty in magnitude and timing

exchange rate theory and practice this volume grew out of a national bureau of economic research conference on exchange rates held in bellagio italy in 1982 in it the world s most respected international monetary economists discuss three significant new views on the economics of exchange rates rudiger dornbusch s overshooting model jacob frenkel s and michael mussa s asset market variants and pentti kouri s current account portfolio approach their papers test these views with evidence from empirical studies and analyze a number of exchange rate policies in use today including those of the european monetary system

the globalization of liberalization policy diffusion in the international political economy one of the most important developments over the past three decades has been the spread of liberal economic ideas and policies throughout the world these policies have affected the lives of millions of people yet our most sophisticated political economy models do not adequately capture influences on these policy choices evidence suggests that the adoption of liberal economic practices is highly clustered both temporally and spatially we hypothesize that this clustering might be due to processes of policy diffusion we think of diffusion as resulting from one of two broad sets of forces one in which mounting adoptions of a policy alter the benefits of adopting for others and another in which adoptions provide policy relevant information about the benefits of adopting we develop arguments within these broad classes of mechanisms construct appropriate measures of the relevant concepts and test their effects on liberalization and restriction of the current account the capital account and the exchange rate regime our findings suggest that domestic models of foreign economic policy making are insufficient the evidence shows that policy transitions are influenced by international economic competition as well as the policies of a country s sociocultural peers we interpret the latter influence as a form of channeled learning reflecting governments search for appropriate models for economic policy

partisan and electoral motivations and the choice of monetary institutions under fully mobile capital central bank independence and pegged exchange rates have each been viewed as solutions to the inflationary bias resulting from the time inconsistency of discretionary monetary policy while it is obvious that a benevolent social planner would opt for such an institutional solution it is less obvious that a real world incumbent facing short term partisan or electoral pressures would do so in this article i model the choice of monetary institutions from the standpoint of a survival maximizing incumbent it turns out that a wide range of survival maximizing incumbents do best by forfeiting control over monetary policy while political pressures do not in general discourage monetary commitments they can influence the choice between fixed exchange rates and central bank independence i highlight the importance of viewing fiscal policy and monetary policy as substitutes and identify the conditions under which survival maximizing incumbents will view fixed exchange rates and central bank independence as substitutes in so doing i provide a framework for integrating other contributions to this volume

the origins of persistent current account imbalances in the post bretton woods era why do some countries run persistent current account surpluses why do others run deficits often over decades leading to enduring global imbalances such persistent imbalances are the root cause of many financial crises and a major source of international economic conflict we propose that differences in wage bargaining institutions explain a large share of imbalances through their effect on the trade balance in countries with coordinated wage bargaining wage growth in export industries can be restrained to ensure competitiveness leading to persistent trade surpluses we estimate the contribution of these institutions to trade balances in organisation for economic co operation and development oecd member countries since 1977 and find ample support for our hypothesis contrary to much of the literature the choice of fixed or floating exchange rate regimes has only a small effect on trade or current account balances in other words internal adjustment in surplus countries via wage bargaining institutions trumps external adjustment by deficit countries

political parties and the supply side of the economy the provision of physical and human capital in advanced economies 1960 90 theory partisan tenure of government in contrast to institutionalist and structural approaches is used to explain the nature of governmental strategies to affect the supply side of the economy the provision of the input factors capital and labor hypotheses supply side economic strategies are a function of the party in office left wing governments spend heavily in physical and human capital formation to raise the productivity of factors and the competitiveness of the economy rightwing governments rely instead on private agents to maximize economic growth the organization of the domestic political economy and the international economy which place heavy limits on the capacity of parties to affect the conduct of macroeconomic policies hardly constrain the choice of supply side economic strategies methods regression analysis of data for levels of public spending on gross fixed capital formation and on education in oecd nations from 1960 to 1990 results supply side policies conform to partisan preferences throughout the period examined the institutional configuration of the economy affected policies jointly with government partisanship until the oil shock but not afterwards economic openness does not constrain the choice of supply side policies

economic actors lobbying influence on the prospects for war and peace political scientists and economists have long been interested in the role of special interests in the policymaking process in the past few years a series of important new books have argued forcefully that the lobbying activities of economic actors have an important influence on the prospects for war and peace all of these analyses claim that whether economic actors enhance or decrease the likelihood of conflict ultimately depends on the domestic political balance between economic actors who have a strong vested interest in pushing for peace versus those that do not i advance two contrary arguments at least among the advanced states i posit there are no longer any economic actors who will be favorable toward war and who will lobby the government with this preference all of the identified mechanisms that previously contributed to such lobbying in these states have been swept away with the end of colonialism and the rise of economic globalization in particular i show that the current structure of the global economy now makes it feasible for foreign direct investment to serve as an effective substitute for conquest in a way that was not possible in previous eras my second argument concerns those economic actors in advanced states with a preference for peace i posit that it has become unnecessary for them to directly lobby the government to avoid war on economic grounds because economic globalization the accumulation of decisions by economic actors throughout the globe now has sufficiently clear economic incentives for leaders

openness and the politics of potable water improving access to potable water has become an increasingly urgent concern for developing nations in the current era of globalization according to standard wisdom if developing countries undertake certain domestic reforms such as investing in infrastructure and engineering then safe and clean drinking water will improve this analysis uncovers however that in addition to such domestic efforts one of the greatest factors affecting water uncertainty is in fact internationally induced trade surprisingly both scholars and practitioners have neglected the potential impacts of expanding trade on access to potable water this analysis is the first large n cross national study of water that focuses on the interplay of trade and politics both international and domestic as the primary driving forces behind improvements in or constraints to water access the author hypothesizes that growing export pressures are constraining drinkable water in poor countries but a particular domestic condition can mit

on optimal cartel deterrence policies abstract this paper studies audit policies designed to deter explicit cartels in the most effective way we first compare a standard random and stationary audit strategy with a simple deterministic but non stationary strategy we show that the certainty of an ulterior control may better deter collusion than the recurrent threat of a sword of damocles that would lead on average to same frequency of audit we then explore more complex non stationary strategies and show that it is theoretically possible to deter collusion in the whole economy even with a small audit budget

from populism to neoliberalism labor unions and market reforms in latin america in the late 1980s populist labor parties which had advanced protectionism and state intervention in the postwar period implemented market oriented reforms in argentina mexico and venezuela in all three countries market reforms hurt their union allies the interaction between allied unions and governing labor parties however varied across countries and across sectors within the same country while some unions endorsed neoliberal reforms others rejected them despite their long term alliance with governing parties while some unions obtained concessions others failed to do so this article argues that the incentives created by partisan loyalties partisan competition and union competition explain these interactions partisan loyalty results from the long term affiliation of unions with a political party partisan competition takes place among union leaders affiliated with different political parties for the control of unions union competition occurs in diverse national and sectoral contexts among labor organizations for the representation of the same workers loyalty derived from a long term affiliation with the incumbent party facilitates collaboration between labor unions and the government yet if partisan competition makes loyal union leaders afraid of being replaced by activists affiliated with the opposition parties their incentives for militancy increase as a way of showing their responsiveness to the rank and file hurt by market reforms union competition for the representation of the same workers makes coordination more difficult thereby weakening unions and making them less likely to obtain concessions from the government despite their partisan loyalty the article presents empirical evidence from eighteen cases including national confederations and individual unions in five economic sectors in argentina mexico and venezuela to test this theory

national tax systems versus the european capital market capital taxation alberto giovannini the current structure of taxes on capital income across ec countries can be exploited by corporations to reduce tax burdens skilled individuals can indulge in tax avoidance too the liberalization of capital movements stands to turn tax avoidance into a cottage industry this article provides a primer on capital income taxes and describes strategies which reduce the tax burden from a policy perspective the question is how to avoid massive tax evasion after 1992 there is no need to harmonize if the right taxation principle is adopted two principles are contrasted the territorial principle according to which taxes are levied on domestic investment irrespective of the country of residence of the beneficiary and the worldwide principle according to which taxes are levied on domestic savings irrespective of where they are invested it is shown that the worldwide principle involves much fewer distortions than the territorial principle a strict application of this principle would effectively solve the problem of tat evasion in europe without requiring full harmonization of the tax systems its full implementation would require the abolition of withholding taxes the elimination of tax deferrals which are quite pervasive throughout europe and an in depth review of blocking and secrecy laws

democracy and markets the case of exchange rates the relationships between the workings of democratic institutions and currency markets are studied severa competing propositions about how political re equilibration affects currency markets are derived and tested the results support the view that democratic politics affects currency markets expectations and uncertainty about electoral outcomes and government survival affect the probability of switching between currency market equilibria additionally opinion polls about chief executive performance have a direct effect on the probabilities of switches between currency regimes suggesting that these polls cause currency traders to revise their expectations about the stability of governments and or the contents of public policies electoral institutions mitigate the impact of politics on currency market equilibria political effects are weaker in countries with proportional representation electoral systems than in countries with majority plurality systems there is less evidence that central bank independence consensual corporatist systems or political coherency reduces the effect of politics on currency markets he study of democracy and markets is at the heart of political economy understanding how political equilibration and economic equilibration are related is one of the main challenges facing this field the size and nature of currency markets make them especially important cases substantively with globalization currency markets have become important constraints on elected governments reducing their room to maneuver analytically in comparison to most goods markets currency markets are informationally efficient asset markets with distinctive equilibria today s exchange rate is determined by currency traders fully informed expectations about tomorrow s exchange rate the sensitivity of these markets to the arrival of new information therefore makes them particularly well suited for studying the effects of political news and uncertainty on economic equilibration 1 this article demonstrates there are informationally relevant political factors insofar as exchange rate determination is concerned factors that directly affect the transition probabilities between currency market equilibria moreover these factors vary in important ways across democracies some electoral institutions lessen the effects of politics on currency

does ict generate economic growth a meta regression analysis despite phenomenal technological progress and exponential growth in computing power economic growth remains comparative sluggish in this paper we investigate two core issues 1 is there really no connection between ict and national economic growth and 2 what factors moderate the ict growth relationship we apply meta regression analysis to 466 estimates drawn from 59 econometric studies that explore the solow or productivity paradox that there is little impact of ict on economic growth and productivity we explore the differential impact of ict on developed and developing countries and the differential impact of different types of ict landlines cell phones computer technology and internet access after accommodating potential econometric misspecification bias and publication selection bias we detect evidence that ict has indeed contributed positively to economic growth at least on average both developed and developing countries benefit from landline and cell technologies with cell technologies growth effect approximately twice as strong as landlines however developed countries gain significantly more from computing than do developing countries in contrast we find little evidence that the internet has had a positive impact on growth

competing commitments technocracy and democracy in the design of monetary institutions in this article i refine and expand the agenda for research on monetary institutions first i evaluate the analyses and research designs presented in this special issue of international organization out of this evaluation several ideas about how to produce a third generation of research on this topic emerge specific ideas include how to create a better synthesis with certain branches of economics such as information economics broaden the welfare criteria on which institutional choices are made deepen the analyses of coalitional and other political processes on which the choice of institutions are based and strengthen the tests that are offered in support of these choices in the second part of this article i explore questions of how popular sovereignty over economic policy and institutional choice are achieved i show that the institutional regimes proposed in the special issue are in a sense democratic as long as the public s perceived consensus about economic policies and macroeconomic outcomes is real however if as new work suggests there is genuine dissensus about policy and macroeconomic objectives it is no longer clear that the regimes proposed in the special issue are democratic in the conclusion i briefly discuss a possible crisis of imagination in institutional design

domestic responses to capital market internationalization under the gold standard 1870 1914 the internationalization of capital markets that occurred during the era of the classical gold standard 1870 1914 was part of a broader set of trends that threatened to drain local markets from capital and channel that capital to the national financial center and from there toward other national financial centers still internationalization was neither inevitable uniform nor irreversible but was a political choice informed by redistributional considerations between rival domestic interests and decided by politically dominant coalitions the domestic institutional structure in each country determined the composition of the politically dominant coalition decentralized structures allowed potential losers to curb public policies favorable to capital market internationalization whereas centralized structures allowed expected winners to promote such policies as a result economies with centralized states ended up being the most dependent on the international capital market whereas economies with decentralized states took a less active part in the globalization of finance

the mass political economy of capital controls this article examines mass public opinion toward international financial market regulations known as capital controls conventional wisdom maintains that most voters do not pay attention to or c

grounded globalization foreign capital and local bureaucrats in china s economic transformation summary how does a globalized context influence domestic development policies and the allocation of government resources in an authoritarian country like china this study explores the coalitional politics in china s transition from foreign direct investment fdi attraction to domestic technology upgrading which created winners and losers in the local allocation of government resources drawing on comparative case studies semi structured interviews and newly compiled data at the city level the study finds that the varied levels of government support for domestic upgrading are shaped by coalitions for or against the transition the major obstacle for bureaucrats within a city government to garner resources for domestic technology does not directly depend on the overall level of fdi rather it comes from the vested interest of international commerce bureaucrats these bureaucrats are more likely to form a cohesive coalition when the export share of foreign firms is large at the same time such a coalition is more likely to gain political influence when industrial sales are concentrated in large firms the direction and magnitude of foreign capital influence therefore is channeled and manifested through local bureaucratic coalitions this study sheds light on the politics of implementing development policies in an era in which globalization has cultivated fragmented interests within the local bureaucracy

interests and the wall of ideas germany s eastern trade policy after unification since 1989 germany s domestic and international environments have experienced significant changes thus it is reasonable to expect that the country s long standing foreign and domestic policies will adapt to novel challenges and pressures this article examines eastern trade policy an area in which one might expect to observe a greater degree of government intervention postunification in fact no such adaptation has taken place this empirical puzzle lends itself to analysis based on the interaction of interests institutions and ideas unification altered the prevailing constellation of material economic interests in germany as well as parliamentary electoral institutions however the events of 1989 to 1990 left untouched dominant ideas that shaped the west german political economy as well as crucial sets of domestic and international institutions linked to those ideas the authors conclude that the absence of an interventionist trade response stems from continuity at the nexus of ideas and insti

a political economic critique on the theory of optimum currency areas and the implications for east asia in recent years dynamic debate has arisen as to the desirability and feasibility of creating a monetary union in east asia while the debate has relied heavily on the theory of optimum currency areas this theory has weaknesses in explaining the actual formation of monetary unions at this point political economy analysis appears to demonstrate stronger explanatory power this paper provides a systematic review of the main developments in the literature on optimum currency area theory and in the political economy literature on monetary union in addition it addresses the feasibility of an east asian monetary union by applying the findings in these two academic strands to the region it finds that even though formation of an east asian monetary union may be to some extent feasible from an economic perspective the region s political situation does not appear favourable for the creation of one

voting and turning out for monetary integration the case of the french referendum on the maastricht treaty this article analyses the voting and abstention patterns in french departments in the 1992 referendum on the maastricht treaty in light of the potential impact of monetary union we observe that departmental characteristics implying either greater benefits or lower costs from monetary union are significantly correlated with the approval rate this supports the view that the voting behaviour of individual agents depended on their self interest the impact of economic characteristics on the abstention rate is less clear indeed the variable that is most significantly correlated with abstention in the referendum is average abstention in other elections

small states in big trouble state reorganization in australia denmark new zealand and sweden in the 1980s in australia denmark new zealand and sweden in the 1980s coalitions of politicians fiscal bureaucrats and capital and labor in sectors exposed to international competition allied to transform the largest single nontradables sector in their society the state particularly the welfare state they exposed state personnel and agencies to market pressures and competition to reduce the cost of welfare and other state services the impetus for change came from rising foreign public and private debt rising public debt levels and expensive welfare states interacted to create a tax wedge between employers wage costs and workers received wages this undercut international competitiveness worsening current account deficits and leading to more foreign debt accumulation two factors explain variation in the degree of reorganization in each country differences in their electoral and constitutional regimes and the willingness of left parties to risk splitting their core constituencies introduction of market pressures is an effort to go beyond the liberalization of the economy common in industrial countries during the 1980s and both to institutionalize limits to welfare spending and to change the nature of statesociety relations away from corporatist forms of interest intermediation in short not just less state but a different state

phoenix risen the resurrection of global finance of all the many changes of the world economy since world war ii few have been nearly so dramatic as the resurrection of global finance a review of five recent books suggests considerable diversity of opinion concerning both the causes and the consequences of financial globalization leaving much room for further research competing historical interpretations stressing the contrasting roles of market forces and government policies need to be reexamined for dynamic linkages among the variables they identify likewise impacts on state policy at both the macro and micro levels should be explored more systematically to understand not just whether constraints may be imposed on governments but also how and under what conditions and what policymakers can do about them finally questions are also raised about implications for the underlying paradigm conventionally used for the study of international political economy and international relations more generally

origins of the federal reserve system international incentives and the domestic free rider problem from the civil war to 1914 the united states had one of the worst e nancial systems in the world the dominant institutional feature of the system was the absence of a central bank and its most salient performance characteristics were the recurrence of banking panics and severe seasonal interest rate e uctuations these e nancial problems were economically costly panics were accompanied by sharp declines in the money supply reduced economic activity and increased unemployment and business failures in 1913 congress created the federal reserve system to safeguard the nation from panics and smooth out interest rate seasonals in more general terms the federal reserve was established to provide the national public good of e nancial system stability in this study i explain how american society overcame the collective action problems that normally constrain the production of public goods to inadequate levels in other words the article is about the political effort that produced an infrastructural cornerstone of the modern u s economy in the face of incentives that should have left few people with sufficient motivation to pay for the improvement i bring to bear a joint products selective incentives argument to explain the voluntary collective action behind the federal reserveact 1 the lobbying effort was aboutsolving thepanic problem tobe sure but becausethisexpected benee t approximated a societywide public good it did not on its own motivate collective action instead the united states faced a second problem of e nancial organization before 1914 and it was this problem that created a private inducement to lobby for the federal reserve the structure of the domestic e nancial machinery contributed not only to instability at home but also to the near complete absence of the u s dollar in global e nancial affairs indeed the united states was the only major trading country whose currency did not function as an international currency before 1914 the new this article is a revision of a paper delivered at the 1996annual convention of the southern economic association washington d c 23 25 november i thank michael bordo marc busch william r clark benjamin j cohen barry eichengreen jeffry frieden william keech stephen krasner charles lipson jameslivingston louispauly georgeselgin bethsimmons richardtimberlake danielverdier eugene n white and two anonymous reviewers for very helpful comments 1 see olson 1965 and sandler 1992

veto points veto players and international trade policy much of the literature on foreign economic policy focuses on the preferences of societal groups to explain policy decisions here however the author emphasizes the effects of domestic political i

public inflation aversion and the political economy of macroeconomic policymaking do the macroeconomic priorities of citizens differ across countries if so what accounts for this variation and what are its consequences for explanations of the choice of monetary institutions macroeconomic policy and international monetary cooperation this article uses survey data from twenty advanced economies to examine individual preferences about macroeconomic priorities the analysis establishes three key findings first the results suggest that economic context defined by inflation and unemployment performance has a substantial impact on the public s economic objectives in a way that is broadly consistent with the specification of utility loss functions in the theoretical political economy literature second the results suggest that there is significant cross country variation in inflation aversion controlling for economic context third some of this variation is accounted for by national level factors affecting the aggregate costs of inflation and unemployment these results have significant implications for optimal monetary policymaking the explanation of variation in economic outcomes and for accounts of the choice of institutional frameworks for policymaking i thank the bank of england the center for basic research in the social sciences and the institution for social and policy studies for research support and jim alt andrew bailey bill bernhard lawrence broz john freeman jeff frieden jim granato shigeo hirano david lake jeff lax simon price rose razaghian ron rogowski david stasavage gabriel sterne mike tomz jim vreeland the editor and two anonymous reviewers for helpful comments all views expressed are those of the author and do not represent those of the bank of england

capital mobility and coalitional politics authoritarian regimes and economic adjustment in southeast asia this article investigates the coalitional bases of authoritarian rule to explain striking variation in adjustment policy to the asian financial crisis in indonesia and malaysia given currency depreciation with financial sector fragility holders of mobile assets prefer to maintain an open capital account while owners of fixed assets and labor favor restrictions of capital mobility to facilitate expansionary macroeconomic policies differences in adjustment policy across the two countries reflect differences in the political coalitions supporting the authoritarian regimes these findings illuminate the nature of political conflict during financial crises and show how a nuanced view of the coalitions supporting authoritarian rule can yield powerful insights into the political economy of authoritarianism and economic adjustment in a global economy

mobile capital domestic institutions and electorally induced monetary and fiscal policy the literature on global integration and national policy autonomy often ignores a central result from open economy macroeconomics capital mobility constrains monetary policy when the exchange rate is fixed and fiscal policy when the exchange rate is flexible similarly examinations of the electoral determinants of monetary and fiscal policy typically ignore international pressures altogether we develop a formal model to analyze the interaction between fiscal and monetary policymakers under various exchange rate regimes and the degrees of central bank independence we test the model using data from oecd countries we find evidence that preelectoral monetary expansions occur only when the exchange rate is flexible and central bank independence is low preelectoral fiscal expansions occur when the exchange rate is fixed we then explore the implications of our model for arguments that emphasize the partisan sources of macroeconomic policy and for the conduct of fiscal policy after economic and monetary union in europe

economic policy institutions and entrepreneurship economists have debated the issue of state intervention in the economic process in capitalist economies intensively for decades often however without considering the effects of state intervention on entrepreneurship in this paper we undertake a critical analysis of the institutionalist theory of state intervention developed by ha joon chang he identifies two key roles for the state in facilitating structural change namely firstly to pronounce a vision for the future state entrepreneurship and secondly management of conflicts which arise during the process of structural change we also examine how well the swedish model of state intervention fits into chang s model as well as possible drawbacks with the swedish model not least in terms of reducing the incentives for entrepreneurship thirdly we examine the possibility that because of radical changes in its economic and political environment the swedish model has become less successful in carrying out the two key roles outlined by dr chang in the last three decades finally we discuss the implications of these changes for the chang style interventionalist state is there any room left for structural change management by the state in the global era if so what are the appropriate measures and policy levels for this type of intervention and in particular how can proper institutions and incentives for entrepreneurship be used to facilitate the structural change process

international macroeconomic policy coordination when policymakers do not agree on the true model the authors relax the assumption of the literature on international coordination that policymakers know the true model t wo countries will still be able to agree on a cooperative policy pack age that each believes will improve the objective function relative t o the nash noncooperative solution however the bargaining solution may move the target variables in the wrong direction these points ar e illustrated with monetary and fiscal multipliers taken from simulat ions of ten leading econometric models out of 1 000 possible combina tions of models that could represent u s beliefs non u s beliefs and the true model monetary coordination improves u s welfare in on ly 546 cases copyright 1988 by american economic association

globalization taxation and burden shifting in latin america most researchers interested in the relationship between global markets and public policy focus on advanced industrial democracies in contrast we examine competing hypotheses as to globalization s effect on governments by expanding the scope of the discussion to include developing nations more specifically we investigate the relationship between international market integration and the evolving burden of taxation on capital as well as the subsequent response of markets to shifts in tax policy in latin america since the late 1970s consistent with our theoretical expectations we find that global market forces are more constraining vis a vis tax policy in latin america than in the world s wealthiest nations despite these market based pressures however national politics continue to influence tax policy in latin america in a manner consistent with findings on advanced industrial democracies as such developing nations continue to have some room to manipulate policy though within the context of a more strictly neoliberal context than their counterparts in advanced industrial democracies

international systems and domestic politics linking complex interactions with empirical models in international relations following older debates in international relations literature concerning the relative importance of domestic versus systemic factors newer debates emphasize interdependence among states and the complex interactions between systemic and domestic factors as globalization and democratization advance theories and empirical models of international politics have become more complicated we present a systematic theoretical categorization of relationships between domestic and systemic variables we use this categorization so that scholars can match their theory to the appropriate empirical model and assess the degree to which systemic factors affect their arguments we also present two advances at the frontier of these empirical models in one we combine hierarchical models of moderating relationships with spatial models of interdependence among units within a system in the other we provide a model for analyzing spatial interdependence that varies over time this enables us to examine how the level of interdependence among units has evolved we illustrate our categorization and new models by revisiting the recent international political economy ipe debate over the relationship between trade policy and regime type in developing countries

monetary union and wage bargaining institutions in the eu extrapolating from some member state experiences this article considers the question of how monetary union in the eu is likely to impact the preferences of governments employers and unions regarding the organization of wage bargaining european monetary union involves a decentralization of wage bargaining centered at the national level in relation to monetary policy centralized at the european level drawing on recent literature and on the experience of two member states italy and spain which prior to emu underwent periods of intense bargaining fragmentation the author argues that the imposition of restrictive monetary policy in a fragmented wage bargaining context in which workers nonetheless have substantial bargaining rights tends to have perverse effects these effects ultimately led governments and bargaining actors in italy and spain to seek a reorganization of bargaining that gave national actors greater control over wage setting the article considers to what extent a similar dynamic might play out in the euro zone

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

wage bargaining central bank independence and the real effects of money the effects of financial capital mobility on monetary policy autonomy are relatively well understood but the importance of particular monetary regimes in distinct national institutional settings is not this article is a theoretical and empirical exploration of the effects of monetary policy regimes on unemployment in different national wage bargaining settings based on a rational expectations two stage game of the interaction between the wage behavior of labor unions and the monetary policies of governments i argue that monetary policies have real employment effects in all but the most decentralized bargaining systems specifically in intermediately centralized bargaining systems a credible government commitment to a nonaccommodating monetary policy rule will deter militant wage behavior with salutary effects on unemployment in highly centralized systems by contrast restrictive monetary policies will clash with unions pursuit of wage distributive goals and produce inferior employment performance only in highly fragmented bargaining systems is money neutral in the sense that employment performance is unaffected by monetary regimes the model has clear consequences for the optimal design of central banks and collective bargaining arrangements and suggests new ways to study institutional change hereunder the causal effect of increasingly globalized capital markets the argument is supported by pooled time series data for fifteen oecd countries over a twenty one year period

veto players and the choice of monetary institutions i argue that two types of veto players matter in the choice of monetary institutions party veto players and subnational governments which are strong in federal systems but weak in unitary systems a crucial issue is whether voters can readily identify the manipulation of the economy with party players a second issue concerns the national party veto player s ability to control either fiscal or monetary policy in one party unitary governments identification and control are clear parties where such governments are common prefer flexible exchange rates and dependent central banks in multiparty coalition governments in unitary systems identification is traditionally difficult and the ability to target benefits to specific constituencies under fiscal policy makes fiscal policy autonomy more attractive for coalition governments such governments prefer central banks that are politically independent but that finance government debt under federalism parties that constitute the central government have less control over fiscal policy and they prefer flexible exchange rates subnational governments do not support a dependent central bank that gives more power to the central government

the political economy of the euro crisis this article introduces the special issue on the political economy of the euro crisis which aims to improve our understanding of the causes consequences and implications of the highly unusual nature of this crisis a financial crisis among developed countries within a supranational monetary union the article provides a brief chronology of the crisis discusses its underlying causes and reviews the ways in which comparative and international political economy can help us understand the crisis the article then discusses the individual and collective contributions of the articles in the special issue and discusses possible future research paths on the political economy of the euro crisis we conclude with a brief discussion of how a political economy perspective informs our understanding of the long term prospects for the eurozone and european integration

increasing returns to scale in financial intermediation and the non neutrality of government policy a general equilibrium model of imperfectly competitive financial intermediaries is constructed and used to study the effects of some standard policy experiments one time increases in the growth rate and in the level of the stock of money have non neutral and sometimes surprising effects on interest rates the quantity of intermediated borrowing and lending the number of intermediary firms inflation and the price level optimal government macroeconomic policy is shown to reflect a tradeoff between public sector frictions and the capital market distortion created by increasing returns to scale and imperfect competition in private intermediation

financial interdependence and the state international monetary relations at century s end as the twentieth century draws to a close one can find sharply contrasting views among leading scholars on almost every key issue in positive international political economy how strong are international as opposed to domestic influences on policy how important are issues of national security high politics versus economic considerations low politics what role do institutions international and domestic play in influencing and constraining the behavior of governments why is international cooperation rare but not unheard of the list goes on and on

corporatism trade liberalization and sectoral responses the case of venezuela 1989 99 abstract the venezuelan manufacturing sector unlike agriculture cooperated with state s efforts to liberalize trade in the 1990s despite the economic costs it absorbed and the political opportunities to sabotage the reforms this paper offers two explanations for this which modify and conciliate traditional interest based and corporatist theories of state society relations high levels of sectoral autonomy from the bureaucracy and political parties and hence congress together with low levels of involvement in profit making on the part of the associations representing the sector encourage sectoral cooperation with costly and risky state policies in addition traditional corporatist instruments used by states inducements and constraints hurt rather than enhance state sector cooperation

de globalization theories predictions and opportunities for international business research de globalization now a distinct possibility would induce a significant qualitative shift in strategies structures and behaviors observable in international business ib coming to terms with this qualitative shift would require ib research to develop a much deeper integration of politics the key driver of de globalization to support such integration this paper introduces two relevant theories of de globalization from political science liberalism and realism both predict de globalization under current conditions but lead to different expectations about the future world economy liberalism suggests a patchwork of economic linkages while realism predicts the emergence of economic blocs around major countries this paper discusses the resulting opportunities in three areas of ib research political strategies and roles of multinational enterprises mnes global value chains and the role of the national context for political strategies and roles there is a need to explore how regular business activities and deliberate political agency of mnes affect the political sustainability of globalization for value chains questions include their future reach and specialization changes in organizational forms and the impact of political considerations on location decisions research opportunities on national contexts relate to their ability to sustain globalization and their connection with economic and military power

doctors with borders occupational licensing as an implicit barrier to high skill migration research on the political economy of immigration overlooks the specificity of human capital in skilled occupations and its implications for immigration preferences and policymaking conclusions that skilled americans are unconcerned about labor market competition from skilled migrants build on a simple dichotomy between high and low skill migrants in this article we show that natives turn to occupational licensing regulations as occupation specific protectionist barriers to skilled migrant labor competition in practice high skill natives face labor market competition only from those high skill migrants who share their occupation specific skills licensure regulations ostensibly serve the public interest by certifying competence but they can simultaneously be formidable barriers to entry by skilled migrants from a collective action perspective skilled natives can more easily secure sub national occupation specific policies than influence national immigration policy we exploit the unique structure of the american medical profession that allows us to distinguish between public interest and protectionist motives for migrant physician licensure regulations we show that over the 1973 2010 period states with greater physician control over licensure requirements imposed more stringent requirements for migrant physician licensure and as a consequence received fewer new migrant physicians by our estimates over a third of all us states could reduce their physician shortages by at least 10 percent within 5 years just by equalizing migrant and native licensure requirements this article advances research on the political economy of immigration and highlights an overlooked dimension of international economic integration regulatory rent seeking as a barrier to the cross national mobility of human capital and the public policy implications of such barriers

death of the partisan globalization and taxation in south america 1990 2006 correcting the relative lack of attention to the revenue side of public finance this article examines to what extent globalization constrains partisan tax policy the author hypothesizes that political ideology is still a good predictor of taxation in the neoliberal era advancing this argument against the prominent globalization thesis that global economic pressures have supplanted political ideology as the driving force of revenue policy although research in developed democracies identifies a resilient link between partisanship and policy outcomes the impact of the drastic neoliberal transition on partisan policy making in the developing world remains poorly understood using time series cross section data to evaluate partisan taxation in south america the author finds that partisanship is a reliable indicator of tax revenue in the neoliberal era counterintuitively however the promarket right generates more tax revenue than the interventionist left the author argues that this previously unexpec

investing in the peace economic interdependence and international conflict research appears to substantiate the liberal conviction that trade fosters global peace still existing understanding of linkages between cone ict and international economics is limited in at least two ways first cross border economic relationships are far broader than just trade global capital markets dwarf the exchange of goods and services and states engage in varying degrees of monetary policy coordination second the manner in which economics is said to inhibit cone ict behavior is implausible in light of new analytical insights about the causes of war we discuss and then demonstrate formally how interdependence can ine uence states recourse to military violence the risk of disrupting economic linkages particularly access to capital may occasionally deter minor contests between interdependent states but such opportunity costs will typically fail to preclude militarized disputes instead interdependence offers nonmilitarized avenues for communicating resolve through costly signaling our quantitative results show that capital interdependence contributes to peace independent of the effects of trade democracy interest and other variables students of world politics have long argued that peace is a positive externality of global commerce theorists like montesquieu and kant and practitioners like woodrow wilson asserted that economic relations between states pacify political interaction mounting evidence in recent years appears to substantiate these claims multiple studies many identie ed with the democratic peace link interstate trade with reductions in militarized disputes or wars 1 while we concur with the evolving

room to move international financial markets and national welfare states a central research question in international political economy concerns the influence of financial markets on government policy outcomes to what extent does international capital mobility limit government policy choices i evaluate the relationship between international financial markets and government policy outcomes with a focus on the government bond market in developed democracies evidence includes interviews with financial market participants and a cross sectional time series analysis of the determinants of interest rates this evaluation suggests that governments of developed democracies face strong but narrowly defined financial market pressures financial market participants are concerned with a few macroeconomic policy indicators including inflation rates and government deficit gdp ratios but not with micropolicy indicators such as the distribution of government spending across functional categories in these areas governments retain policymaking autonomy i conclude by exploring the role of financial market influences within domestic politics and offering suggestions for further research

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

crisis politics in europe why austerity is easier to implement in some countries than in others when countries face balance of payments crises their policy responses vary widely this article argues that the choice between the two main options of internal adjustment i e austerity and stru

capital mobility and the origins of stock markets i illustrate the accepted though hardly researched idea that political institutions play a role in locking in factor specificity across sectors space and borders i use the emergence of modern capital markets in the nineteenth century a process that threatened to redeploy financial resources away from land and traditional sectors to heavy industry as a test case to ascertain the degree of domestic financial capital mobility in nine advanced industrialized countries the main finding is that cross national variations in financial capital mobility holding constant the level of economic development reflect the degree of state centralization

international institutions and domestic compensation the imf and the politics of capital account liberalization certain governments have been faster than others in relaxing their restrictions on the cross border movement of capital how can we explain the timing and extent of financial liberalization across countries since the 1970s we argue that imf stabilizationprogramsprovideawindowofopportunityforgovernmentstoinitiatefinancialreforms butthatpolicymakers are more likely to seize this opportunity when welfare expenditures are high large loans from the imf shield policy makers from the costs of financial reform while welfare expenditures provide credibility to the government s ex ante promises of compensation to individuals who are harmed by the reforms we test this hypothesis on data for 87 countries from 1975 to 2002 we employ a spatial autoregressive error sample selection model which accounts for the nonrandom participation of countries in imf programs as well as the processes of international policy diffusion the results provide strong support for the interactive effect of imf programs and domestic welfare expenditures on financial liberalization

asset specificity and the political behavior of firms lobbying for subsidies in norway previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets but no studies have shown directly that firms behave as predicted we adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms in particular we examine the lobbying choices of norwegian firms in the 1980s given available subsidy funds from norway s oil boom and some government decisions in the 1970s firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves joint contacting of parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets data analysis shows that asset specificity as indicated by r d intensity and job immobility predicts joint contacting independently of plausible alternative explanatory variables like firm size and export orientation