divided government and u s trade policy much ado about nothing scholars assert that divided government impedes the liberalization of u s trade policy they claim that presidents favor freer trade and will use the negotiating authority congress delegates to them to reach agreements lowering trade barriers since presidents gain more support from their congressional co partisans less liberalization ensues under divided government this theory rests on the premise that party is unrelated to congressional trade policy preferences beyond legislators tendencies to support their presidential co partisans yet before 1970 congressional democrats were relatively free trading regardless of the president s party affiliation since then the same has been true of republicans divided government facilitates the trade policies of presidents from the protectionist party since they win more support from their opposition in this area divided government does impede the efforts of presidents from the free trading party to liberalize i conclude that divided government has no consistent effect on trade policy outcomes

political cleavages and changing exposure to trade combining the classical theorem of stolper and samuelson with a model of politics derived from becker leads to the conclusion that exogenous changes in the risks or costs of countries external trade will stimulate domestic conflict between owners of locally scarce and locally abundant factors a traditional three factor model then predicts quite specific coalitions and cleavages among owners of land labor and capital depending only on the given country s level of economic development and its land labor ratio a preliminary survey of historical periods of expanding and contracting trade and of such specific cases as the german marriage of iron and rye u s and latin american populism and asian socialism suggests the accuracy of this hypothesis while the importance of such other factors as cultural divisions and political inheritance cannot be denied the role of exogenous changes in the risks and costs of trade deserves further investigation

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

diffusion and the international context of democratization democracy does not evolve sui generis the spatial clustering in democ racy and transitions suggests that international factors play a prominent role in forg ing democracies as well as influencing their durability we argue that democracy often comes about as a result of changes in the relative power of important actors and groups as well as their evaluations of particular institutions both of which are often influenced by forces outside the country in question the scope and extent of con nections with other democratic countries in a region can strengthen support for dem ocratic reform and help sustain institutions in transitional democracies results from a transition model demonstrate that international factors can exert a strong influence on the prospects for transitions to democracy and the spatial clustering in democ racy and transitions cannot adequately be explained by the hypothesized domestic social requisites of individual countries

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

dependency revisited international markets business cycles and social spending in the developing world while increased exposure to the global economy is associated with increased welfare effort in the organization for economic cooperation and development oecd the opposite holds in the developing world these differences are typically explained with reference to domestic politics tradables unions and the like in the developing world are assumed to have less power or interests divergent to those in the oecd interests that militate against social spending i claim that such arguments can be complemented with a recognition that developed and developing nations have distinct patterns of integration into global markets while income shocks associated with international markets are quite modest in the oecd they are profound in developing nations in the oecd governments can respond to those shocks by borrowing on capital markets and spending countercyclically on social programs no such opportunity exists for most governments in the developing world most of which have limited access to capital markets in tough times more significant incentives to balance budgets and as a result cut social spending at the times it is most needed thus while internationally inspired volatility and income shocks seem not to threaten the underpinnings of the welfare state in rich nations it undercuts the capacity of governments in the developing world to smooth consumption and particularly consumption by the poor across the business cycle the author would like to thank steph haggard kristin bakke wongi choe tim jones and seminar participants at duke university penn state university washington university mit and the university of new mexico for their helpful comments nancy brune mark hallerberg and rolf strauch and nita rudra were very generous in providing their capital account oecd fiscal and potential labor power data respectively

tax policy in an era of internationalization explaining the spread of neoliberalism i offer an explanation for the widespread diffusion of neoliberal tax policies in the developed democracies after accounting for the policy influences of commonly experienced domestic and international forces i consider several plausible paths of diffusion of neoliberal tax structure my central argument is that the highly visible 1980s market conforming tax reform in the united states should be especially important in shaping subsequent tax policies in other polities there are substantial reasons to believe however that domestic political and institutional forces will shape policymaker assessment of the benefits and costs of neoliberal reforms the strength of right parties and the degree to which the median voter has moved right should condition adoption of neoliberal tax policy the institutions of national and sector coordinated capitalism should also slow the enactment of neoliberal tax reforms i assess these arguments with empirical models of 1981 98 tax rates on capital in sixteen nations i find that changes in u s tax policy influence subsequent reforms in other polities in the long term all nations move toward the u s neoliberal tax structure analysis also shows however that the short term responsiveness to u s tax reforms is notably greater where uncoordinated market institutions are dominant theory and extensive qualitative and quantitative evidence indicate that pressures to compete for mobile assets as balanced against the economic and political costs of adoption anchor the process of diffusion of neoliberal tax policy there is little evidence for the view that systematic policy learning or social emulation drove tax policy diffusion earlier versions of this article were presented at the center for european studies and weatherhead center for international affairs harvard university center for international studies ucla and yale university as well as the 2002 annual meetings of the american political science association an earlier version was published as minda de gunzburg center for european studies harvard university working paper 120 i thank alex hicks rob franzese torben iversen andy martin cathie jo martin participants in the yale ucla and harvard conferences especially geoffrey garrett helen milner dennis quinn and beth simmons and two anonymous referees and the editors of international organization for helpful comments i also gratefully acknowledge the contribution of sven steinmo that comes by way of our past collaborative work on tax policy

the reductionist gamble open economy politics in the global economy international political economy ipe should transition to third wave scholarship because open economy politics oep which dominates current american ipe scholarship can generate inaccurate knowledge oep can produce inaccurate knowledge because it studies domestic politics in isolation from international or macro processes this methodological reductionism is often inappropriate for the phenomena ipe studies because governments inhabit a complex social system as a result the political choices that oep strives to explain are typically a product of the interplay between domestic politics and macro processes when oep omits causally significant macro processes from empirical models the models yield biased inferences about the domestic political relationships under investigation although scholars tolerated such errors when the gains from oep were large these errors are less tolerable now that oep has matured consequently the field should transition toward research that is nonreductionist problem driven and pluralistic

no vacancy the political geography of immigration control in advanced industrial countries this article presents a unique framework for analyzing the politics of immigration control in developed countries and reviews related political theories the author describes distinctive patterns of immigration in selected oecd countries and standard explanations the author argues that the costs and benefits of immigration are spatially unevenly distributed and explains how spatial concentrations affect costs and benefits as well as how local conditions population and the business community create support for and opposition to immigration evidence from great britain is used to support the framework control of immigration is due to the power of local constituencies in creating and maintaining a national political coalition local constituency preferences are a systematic but not exclusive feature that underpin the politics of immigration control other factors may have periodic impacts the case of great britain during 1955 81 illustrates the importance of disaggregated analysis cross national analyses will reveal the variation in level of impact japan and germany with similar economic and political histories indicate substantial differences in net demand for immigration conditions such as high rapidly increasing immigration proportions access to social services and higher unemployment may lead to hostility and less community support for immigration the theory is based on native immigrant competition over scarce resources variable business support depending upon the flexibility of local markets and potential for capital mobility and the dynamics of party competition as influenced by underlying structural conditions

internationalization institutions and political change many analysts associate internationalization of markets with wide ranging changes in domestic politics an open polity approach shows how extant domestic institutions mediate in this relationship between internationally induced changes in domestic actors policy preferences on the one hand and national policy and institutional outcomes on the other the nature of labor unions and formal political institutions often results in political outcomes that differ significantly from those that would ensue if outcomes simply mirrored preference changes in addition while existing institutions may sometimes constrain governments from pursuing policies that would improve long term economic performance governments will often fail to change these institutions because of short term political considerations

the delivery and control of quality in supplier producer contracts we model the effect of contract parameters such as price rebates and after sales warranty costs on the choice of quality by a supplier the inspection policy of a producer and the resulting end product quality both noncooperative and cooperative settings are explored the paper s contribution is to highlight the importance of strategic and contractual issues in quality management

the rebirth of the liberal creed paths to neoliberalism in four countries1 since the 1970s market based economic policies have been institutionalized as a nearly global policy paradigm using four national case studies this article shows that economic and financial globalization played a critical role in fostering the transition to neoliberal policies but that local institutional conditions were decisive in shaping the nature and meaning of the shift while the analysis finds that developing countries appear more dependent upon direct external pressures than developed ones it also shows that institutionalized patterns of state society relations determined the way in which neoliberal transitions were carried out somewhat irrespectively of the level of economic development in chile and britain poorly mediated distributional conflict created the ideological conditions for a monetarist revolution in mexico and france on the other hand neoliberalism was understood mainly as a necessary step to adapt the country to the international economy

contract design and the control of quality in a conflictual environment this paper provides an approach to quality supply by a supplier and quality inspection by a producer which explicitly recognizes the inherently opposing interests these two parties may have the supplier and the producer are modeled as players in a nonzero sum game where the supplier can control the effort invested in the delivery of quality and the producer may or may not inspect incoming materials we study the effect of contract design e g stipulation of penalties for defective units on equilibrium behavior and identify conditions on the contract parameters which will result in the implementation of a cooperative solution

globalization and the changing logic of collective action globalization transforms collective action in domestic and international politics as the scale of markets widens and as economic organization becomes more complex the institutional scale of political structures can become insufficient for the provision of an appropriate range of public goods a process of this sort occurred prior to the emergence of the modern nation state which itself constituted a paradigmatic response to this predicament today however a complex process of globalization of goods and assets is undermining the effectiveness of state based collective action overlapping playing fields are developing made up of increasingly heterogeneous transnational local and intermediate arenas the residual state retains great cultural force and innovative projects for reinventing government are being tried nevertheless the state s effectiveness as a civil association has eroded significantly and this may lead to a crisis of legitimacy

inequality in the world polity the structure of international organization recent research reveals strong effects of involvement in international organizations on state policies but much of this research downplays inequality in world political participation and there is only a limited understanding of what explains world polity ties using data on memberships in intergovernmental and international non governmental organizations igos and ingos for 1960 through 2000 this study analyzes inequality in the world polity igo ties are fairly evenly distributed but the level of inequality in ingo ties is as high as the level of world income inequality since 1960 inequality in ties to igos decreased sharply but inequality in ties to ingos remained more stable a conflict centered model of the world polity is developed here that explains world political participation as a function of material and symbolic conflict rich core western states and societies have significantly more ties to the world polity than do others powerful states dominate igos less now than they did in 1960 but rich core western societies have grown more dominant in the ingo field

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

spatial effects in dyadic data political units often spatially depend in their policy choices on other units this also holds in dyadic settings where as in much of international relations research analysis focuses on the interaction or relation between a pair or dyad of two political units yet with few exceptions social scientists have analyzed contagion in monadic datasets only consisting of individual political units this article catego rizes all possible forms of spatial effect modeling in both undirected and directed dyadic data where it is possible to distinguish the source and the target of interaction for example exporter0importer aggressor0victim and so on this approach enables scholars to formulate and test novel mechanisms of contagion thus ideally paving the way for studies analyzing spatial dependence between dyads of political units to illus trate the modeling flexibility gained from an understanding of the full set of specifi cation options for spatial effects in dyadic data we examine the diffusion of bilateral investment treaties between developed and developing countries building and extend ing on elkins guzman and simmons s 2006 study however we come to different conclusions about the channels through which bilateral investment treaties diffuse rather than a capital importing country being influenced by the total number of bits signed by other capital importers as modeled in their original article we find that a capital importing country is more likely to sign a bit with a capital exporter only if other competing capital importers have signed bits with this very same capital exporter similarly other capital exporters bits with a specific capital importer influ ence an exporter s incentive to agree on a bit with the very same capital importer

reversal of fortunes democratic institutions and foreign direct investment inflows to developing countries does increased democracy promote or jeopardize foreign direct investment fdi inflows to less developed countries we argue that democratic institutions have conflicting effects on fdi inflows on the one hand democratic institutions hinder fdi inflows by limiting the oligopolistic or monopolistic behaviors of multinational enterprises facilitating indigenous businesses pursuit of protection from foreign capital and constraining host governments ability to offer generous financial and fiscal incentives to foreign investors on the other hand democratic institutions promote fdi inflows because they tend to ensure more credible property rights protection reducing risks and transaction costs for foreign investors hence the net effect of democracy on fdi inflows is contingent on the relative strength of these two competing forces our argument reconciles conflicting theoretical expectations in the existing literature empirical analyses of fifty three developing countries from 1982 to 1995 substantiate our claims we find that both property rights protection and democracy related property rights protection encourage fdi inflows after controlling for their positive effect through property rights protection democratic institutions reduce fdi inflows these results are robust against alternative model specifications statistical estimators and variable measurements

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

determining all nash equilibria in a bi linear inspection game abstract this paper addresses a game between an inspection agency and multiple inspectees that are subject to random inspections by that agency we provide explicit easily computable expressions for all possible nash equilibria and verify that none is left out in particular our results characterize situations when there exists a unique nash equilibrium we also explore special features of the nash equilibria and the solution of the problem the inspection agency faces in a non strategic environment

using geographic information systems to study interstate competition scholars have proposed two distinct explanations for why policies diffuse across american states 1 policymakers learn by observing the experiences of nearby states and 2 states seek a competitive economic advantage over other states the most common empirical approach for studying interstate influence is modeling an indicator of a state s policy choice as a function of its neighbors policies with each neighbor weighted equally this can appropriately specify one form of learning model but it does not adequately test for interstate competition when a policy diffuses due to competition states responses to other states vary depending on the size and location of specific populations we illustrate with two substantive applications how geographic information systems gis can be used to test for interstate competition we find that lottery adoptions diffuse due to competition rather than to learning but find no evidence of competition in state choices about welfare benefits our empirical approach can also be applied to competition among nations and local jurisdictions

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

a comment on two concepts of risk premia and certainty equivalents abstract the purpose of this paper is to examine alternative univariate definitions of the risk premium which are applicable in cases of moral hazard where a decision variable affects the risk premium an appealing definition is the maximum of the objective function under certainty minus the selling price of the risk the welfare significance of this risk premium is examined the competitive firm under price uncertainty serves to exemplify the results

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

democracy development and the international system as noted by seymour m lipset over 50 years ago development and democracy have been strongly correlated in the contemporary world today even after the prolonged democratization wave that started in the 1970s and accelerated in the 1990s the distribution of democracies remains highly skewed by level of per capita income whereas 94 of the countries with a per capita income above 10 000 in constant of 1996 held free and competitive elections in 1999 only 18 with a per capita income below 2 000 did so this empirical relationship between income and democracy was even tighter earlier in history just looking at per capita income we can successfully predict 76 of the annual observations of political regimes in sovereign countries after world war two the proportion of cases that are predicted correctly is 85 for the interwar period and 91 before world war one 1

positional deprivation and support for radical right and radical left parties we explore how support for radical parties of both the left and right may be shaped by what we call positional deprivation where growth in income of individuals at a given point in the income distribution is outpaced by income growth elsewhere in that distribution we argue that positional deprivation captures the combination of over time and relative misfortune that can be expected to distinctly spur support for radical left and right parties we explore this possibility by matching new measures of positional deprivation to individual level survey data on party preferences in 20 european countries from 2002 to 2014 we find that positional deprivation is robustly correlated with supporting radical populist parties first positional deprivation generally measured as average income growth across deciles of a country s income distribution minus a respondent s own decile s growth is associated with respondents retreat from mainstream parties and with support for both radical right and particularly radical left parties second positional deprivation relative to the highest and the lowest ends of the income spectrum play out differently for radical right and for radical left support a respondent s positional deprivation relative to the wealthiest decile s growth in his or her country tends to spur support for radical left but not radical right parties in contrast positional deprivation relative to the poorest decile s growth in a respondent s country tends to spur support for radical right but not left parties the results suggest that the combination of over time and relative economic misfortune may be key to how economic experience shapes radical backlash of the left and right

globalization and capital taxation in consensus and majoritarian democracies this article contributes to the growing literature on the role that domestic political institutions play in mediating globalization pressures by arguing that the capital tax constraints arising from international economic integration are the most severe for countries with majoritarian political institutions in doing so the author solves a tax puzzle that challenges conventional thinking about how institutions condition the relationship between economic globalization and domestic politics he presents a formal game theoretic model to sharpen the basic logic of his argument and then tests some of the model s predictions empirically using both quantitative and qualitative evidence

democracy war initiation and victory a study was conducted to examine the effects of nation states political institutions on state relations war fighting and selection effects explanation were compared to explain why democracies were more likely to win wars an analysis of all interstate wars between 1816 and 1982 revealed that democracies that initiate wars often win them results also suggest that domestic political structure is one factor that should not be omitted from the study of international relations copyright 1998 american political science associationrecent empirical scholarship has noted that democracies are significantly more likely to win the wars they fight than are other types of regimes though this finding refutes the general realist claim that regime type is unrelated to foreign policy behavior it also begs the important theoretical question of why democracies are more likely to win wars since different theories of foreign policy behavior provide different answers to this question discerning the real reasons would advance our theoretical understanding of foreign policy behavior scholars offer two different general arguments to explain democracies winning ways first they are perceived as intrinsically more effective at waging war than are nondemocracies hereafter termed the warfighting explanation primarily because it is easier for them to rally their society behind a war effort second as derived from several theories democracies win more often because they are more careful about deciding to initiate war hereafter termed the selection effects explanation significantly the theoretical assumptions of the latter argument are consistent with the structural explanation of the tendency for democracies not to fight one another popularly known as the democratic peace this article explores in detail why democracies are more likely to win wars specifically comparing the war fighting and selection effects explanations our empirical tests discriminate between these explanations by exploring whether democracies are more likely to win all wars in which they participate predicted by the war fighting explanation or just those they initiate predicted by the selection effects explanation our examination of all interstate wars from 1816 to 1982 finds that initiating democracies are significantly more likely to win wars than any other kind of belligerent we also find limited support for the proposition that democracies which are attacked are more likely to win wars than are other kinds of targets these results are in noteworthy contrast to previous empirical studies for three reasons we use a more complete sample account for possible interactions between democracy and initiation and include a more complete set of control variables the article has four parts the first presents the theoretical arguments relating domestic regime type to conflict behavior the second discusses hypotheses operationalization and the data set the third presents empirical results the fourth offers conclusions regime type and conflict behaviorare democracies more likely to win wars mainstream thinking during the twentieth century has occasionally doubted the ability of democracies to defend themselves especially during the 1930s and the cold war recently however scholars have examined the entirety of the post napoleonic historical record with quantitative tests and have found that when democracies fight they tend to win and their wars are of shorter duration bennett and stam 1996 lake 1992 stam 1996 what we call the war fighting and selection effects arguments have been advanced to explain this phenomenon the war fighting explanation argues that democracies simply fight wars more effectively than do other kinds of states lake 1992 developed a model of the state as rent seeker and posited three reasons for democracies superior war fighting abilities democracies extract fewer rents from society hence are wealthier and devote more resources to security they form overwhelming countercoalitions against aggressors democratic governments can extract higher levels of support from society for a war effort we discuss each of these arguments in turn we believe the last is the most persuasive the rent seeking argument has logical shortcomings the model assumes that democracies are wealthier because they extract fewer rents from their society than do autocratic states leading to greater wealth which in turn means more american political science review june 1998 v92 n2 p377 13 page 1 reprinted with permission additional copying is prohibited

competing for capital the diffusion of bilateral investment treaties 1960 2000 over the past forty five years bilateral investment treaties bits have become the most important international legal mechanism for the encouragement and governance of foreign direct investment the proliferation of bits during the past two decades in particular has been phenomenal these intergovernmental treaties typically grant extensive rights to foreign investors including protection of contractual rights and the right to international arbitration in the event of an investment dispute how can we explain the widespread adoption of bits we argue that the spread of bits is driven by international competition among potential host countries typically developing countries for foreign direct investment we propose a set of hypotheses that derive from such an explanation and develop a set of empirical tests that rely on network measures of economic competition as well as more indirect evidence of competitive pressures on the host to sign bits the evidence suggests that potential hosts are more likely to sign bits when their competitors have done so we find some evidence that coercion and learning play a role but less support for cultural explanations based on emulation our main finding is that the diffusion of bits is associated with competitive economic pressures among developing countries to capture a share of foreign investment we are agnostic at this point about the benefits of this competition for development for useful comments on earlier drafts of this article we thank bill bernhard bear braumoeller frank dobbin robert franzese jeffry frieden geoffrey garrett tom ginsburg jude hays lisa martin bob pahre mark ramsayer steven ratner susan rose ackerman and john sides for research assistance we thank elizabeth burden raechel groom and alexander noonan

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

environmental policy convergence the impact of international harmonization transnational communication and regulatory competition in recent years there is growing interest in the study of cross national policy convergence yet we still have a limited understanding of the phenomenon do we observe convergence of policies at all under which conditions can we expect that domestic policies converge or rather develop further apart in this article we address this research deficit from a theoretical perspective we concentrate on the explanatory power of three factors namely international harmonization transnational communication and regulatory competition in empirical terms we analyze if and to what extent we can observe convergence of environmental policies across twenty four industrialized countries between 1970 and 2000 we find an impressive degree of environmental policy convergence between the countries under investigation this development is mainly caused by international harmonization and to a considerable degree also by transnational communication whereas regulatory competition does not seem to play a role

the divergent effects of joining international organizations trade gains and the rigors of wto accession governments have joined the world trade organization wto in vastly different ways some have taken mere days to join without undertaking any trade liberalization while others have taken more than a decade and been forced to undergo significant liberalization we argue that the more rigorous a state s accession to an international organization io and thus the greater policy change required to join the greater the benefits it will receive from membership in the organization in the trade context states facing greater scrutiny from the wto and thus engaging in greater trade liberalization as part of the wto accession process should experience greater trade on joining compared to those who face little scrutiny and engage in little if any liberalization we develop a three part classification of wto members based on type of accession early automatic and rigorous and then compile detailed original data on the accession experiences of each relevant state including length of time number of veto players rounds of questions and tariff and nontariff commitments results of exhaustive quantitative tests on all countries from 1950 to 2006 which are robust to estimator sample period and model specification choices consistently demonstrate that those who engage in the greatest amount of accession driven liberalization experience the greatest trade increases from wto membership particularly in the years right after joining in contrast those who do little or nothing to join do not see any trade gains from being a wto member these findings reconcile previous findings on the effects of wto membership on trade highlight the causal importance of io accession and illuminate the conditions under which ios will have beneficial effects for member states

interdependence in comparative politics substance theory empirics substance interdependence is ubiquitous and often central across comparative politics indeed as the authors show first theoretically any situation involving externalities from one unit s actions on others implies interdependence positive or negative externalities induce negative or positive interdependence which spurs competitive races or free riding with corresponding early or late mover advantages and thus strategic rush to act or delay and inaction the authors show next how to model interdependent processes empirically how not doing so risks omitted variable biases favoring domestic and exogenous external accounts over interdependence but how doing so naively risks simultaneity biases with the opposite substantive implications they then discuss how to estimate properly specified interdependence models and finally how to interpret and present estimated spatio temporally dynamic effects response paths and long run steady states with associated standard errors they illustrate by replicating a not

quality improvement incentives and product recall cost sharing contracts as companies outsource more product design and manufacturing activities to other members of the supply chain improving end product quality has become an endeavor extending beyond the boundaries of the firms in house process capabilities in this paper we discuss two contractual agreements by which product recall costs can be shared between a manufacturer and a supplier to induce quality improvement effort more specifically we consider i cost sharing based on selective root cause analysis contract s and ii partial cost sharing based on complete root cause analysis contract p using insights from supermodular game theory for each contractual agreement we characterize the levels of effort the manufacturer and the supplier would exert in equilibrium to improve their component failure rate when their effort choices are subject to moral hazard we show that both contract s and contract p can achieve the first best effort levels however contract s results in higher profits for the manufacturer and the supply chain for the case in which the information about the quality of the supplier s product is not revealed to the manufacturer i e the case of information asymmetry we develop a menu of contracts that can be used to mitigate the impact of information asymmetry we show that the menu of contracts not only significantly decreases the manufacturer s cost due to information asymmetry but also improves product quality

some stronger measures of risk aversion in the small and the large with applications the arrow pratt measures of risk aversion for von neumann morgenstern utility functions have become workhorses for analyzing problems in the microeconomics of uncertainty they have been used to characterize the qualitative properties of demand in insurance and asset markets to examine the properties of risk taking in taxation models and to study the interaction between risk and life cycle savings problems to name just a few applications equally importantly they have generated the linear risk tolerance class of utility functions which has provided canonical examples in such diverse areas as portfolio theory and the theory of teams despite these successes there have been a number of areas for which the results have been weaker than hoped it is natural to use the risk aversion measures to compare the behavior of individuals in risky choice situations for example consider the individual portfolio choice problem in a two asset world with a riskless asset and a risky asset if individual a has a uniformly higher arrow pratt coefficient of risk aversion than individual b then b will always choose a portfolio combination with more wealth invested in the risky asset but suppose that both assets are risky now there is no obvious sense in which the more risk averse individual can be said to hold a less risky portfolio but it seems strange that such a simple alteration should destroy the analytics which support the basic intuition similarly consider the basic insurance problem if one individual a is more risk averse than another b in the arrow pratt sense it follows that a will pay a larger premium to insure against a random loss than will b typically though an individual evaluates partial rather than total insurance that is only some gambles can be insured against and others must be retained in this case even when the gambles which are retained are independent from those which are insured it is no longer true that the individual whose arrow pratt measure of risk aversion is higher will pay a larger insurance premium the situation is no better when we consider comparative statics exercises for a single individual decreasing absolute risk aversion in the sense of arrow and

welfare state retrenchment revisited entitlement cuts public sector restructuring and inegalitarian trends in advanced capitalist societies in recent years it has become commonplace for comparativists to emphasize the resilience of welfare states in advanced capitalist societies and the failure of neoliberal efforts to dismantle the welfare state challenging some tenets of the resilience thesis this article seeks to broaden the discussion of welfare state retrenchment the authors argue that a sharp deceleration of social spending has occurred in most oecd countries since 1980 that welfare states have failed to offset the rise of market generated inequality and insecurity and that welfare programs have become less universalistic they stress the distributive and political consequences of market oriented reforms of the public sector

global networks and domestic policy convergence a network explanation of policy changes national economies are embedded in complex networks such as trade capital flows and intergovernmental organizations igo s these globalization forces impose differential impacts on national economies depending on a country s network positions this article addresses the policy convergence divergence debate by focusing on how networks at the international level affect domestic fiscal monetary and regulatory policies the author presents two hypotheses first similarity in network positions induces convergence in domestic economic policies as a result of peer competitive pressure second proximity in network positions facilitates policy learning and emulation which result in policy convergence the empirical analysis applies a latent space model for relational dyadic data and indicates that position similarity in the network of exports induces convergence in fiscal and regulatory policies position similarity in the network of transnational portfolio investments induces convergence in fiscal policies and position proximity in igo networks is consistently associated with policy convergence in fiscal monetary and regulatory policies

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

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

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