Domestic policy choices, political institutional change, and financial globalization<sup>1</sup>

Sobel, Andrew

doi:10.1080/03050629808434935

Cited by 5 publications

(7 citation statements)

References 17 publications

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“…short, by the mid-1980s an international regime had emerged that encouraged open capital accounts within the industrialized world (Sobel, 1998). This regime change coincided with rapid growth in international financial markets, which served as an additional source of constraint on domestic capital controls policy choices.…”

Section: The International Dimension Of Capital Controls Policy Changesmentioning

confidence: 99%

“…David Andrews (1994) similarly points to the competitive pressures introduced by capital mobility, and observes that such mobility arises not only because states choose to liberalize controls, but through technological and market changes as well. Beth Simmons (2001) and Andrew Sobel (1998) argue that systemic liberalization was triggered by domestic politics that led to liberalization within a few big states (mostly the United States with the repeal of capital controls in the early 1970s); these isolated changes combined to create a systemic increase in global capital markets, which then created systemic pressures that swept up everyone, including those big states, in a process of liberalization.…”

Section: Determinants Of Capital Controls Policy Changesmentioning

confidence: 99%

“…This was evidenced by external demands (especially German) on Italy to liberalize its capital controls during the late 1980s (Goodman and Pauly, 1993). In short, by the mid‐1980s an international regime had emerged that encouraged open capital accounts within the industrialized world (Sobel, 1998).…”

Section: A Two‐level Approach To Capital Controls Policy Changesmentioning

confidence: 99%

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International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

Kastner¹,

Rector²

2003

Int Studies Q

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States' decisions about regulating international capital movements are shaped in part by institutions and partisanship at the domestic level, but the effects of domestic-level variables are themselves contingent on the constraints imposed by the international system. We amend the vetoplayers hypothesis to account for the effects of international regimes on the political influence of domestic players in state decision-making. The history of changes in international financial regulations over the past four decades provides an ideal case to study the interaction of international regimes and domestic decision-making systems. We create a data set of all capital controls policy changes that 19 OECD parliamentary democracies made during the years 1951-1998. Using these new data, we find that states with a higher number of veto-player parties in government enact fewer capital controls policy changes. Furthermore, ideologically right-of-center governments in these industrialized countries are more likely than others to enact capital controls liberalizations. We also find, however, that the independent effects of these domestic-level variables disappear after the mid-1980s, when the systemic constraints imposed on individual states increased substantially.

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Section: The International Dimension Of Capital Controls Policy Changesmentioning

confidence: 99%

Section: Determinants Of Capital Controls Policy Changesmentioning

confidence: 99%

Section: A Two‐level Approach To Capital Controls Policy Changesmentioning

confidence: 99%

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International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

Kastner¹,

Rector²

2003

Int Studies Q

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“…Quinn and Inclán (1997) show that partisanship interacts with resource endowments to shape policy. Other studies have emphasized how systemic constraints may interact with partisanship in important ways (see especially Simmons, 2001; see also Andrews, 1994;Elkins & Simmons, 2003;Goodman & Pauly, 1993;Helleiner, 1994;Leblang, 1997;Sobel, 1994Sobel, , 1998. (Katzenstein's argument traces openness in corporatist states to adjustments that began as early as the 1950s).…”

Section: Capital-controls Policies and Partisan Transitionsmentioning

confidence: 99%

Partisanship and the Path to Financial Openness

Kastner

Rector

2005

Comparative Political Studies

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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.

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“…The article advances its argument based on three claims about pre-and post-crisis outcomes. Firstly, during the thirty-year process of financial market liberalisation and cross-border integration, regulators and supervisors became more dependent on market interests in determining the pattern of governance, aligning financial governance with the preferences of powerful market players and strengthening the power of private agents to shape and set rules, a general trend often encouraged by states themselves (Cerny 1994;Helleiner 1994aHelleiner , 1994bHelleiner and 1995Underhill 1997;Sobel 1998). This ideational adverse selection did not take place in a vacuum.…”

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confidence: 99%

The Emerging Post-Crisis Financial Architecture: The Path-Dependency of Ideational Adverse Selection

Underhill¹

2014

The British Journal of Politics and International Relations

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This article• Contributes to the debate on policy change and economic ideas after the crisis, finding ideas and material interests to be closely aligned and introducing the notion of 'ideational adverse selection'. • Establishes that pre-crisis financial governance failed to provide financial stability yet provided benefits to precisely those whose advocacy underpinned its emergence. • Argues that despite the adoption of a 'macroprudential approach', the post-crisis reform of financial governance promulgated by the Basel Commitee and IOSCO does not (yet) admit of a 'paradigm shift'. • Concludes that if ideational change and a shift in policy approach is to take place, the nature of the policy community as 'input' must also change. This article focuses on two cases of transnational financial governance that confirm that ideas and material interests are closely aligned in the construction of regulatory institutions at the international level: the Basel-II/III international capital adequacy standards and the IOSCO-based regulatory processes that underpin cross-border securities markets.The article first establishes that the pre-crisis system of financial regulation and supervision left public authorities dependent on private sector expertise and information provision such that policy idea-sets became increasingly aligned with private sector preferences. Secondly, this market-based system of financial governance provided benefits to precisely those whose advocacy underpinned its emergence while facilitating neither financial stability nor resolving the weaknesses of national-level governance in a context of crossborder integration. Lastly, it remains unclear if either pre-crisis alternatives or the lessons of the crisis itself have been applied properly to the reforms. The reform debate continues to pursue an essentially market-based approach to the problem of financial governance at the national, regional and global levels. Policy failure endogenous to a pre-crisis regulatory coalition has so far failed to disturb the tenacity of material interests and inertia of institutional path dependency.This article focuses on the post-crisis financial reform process at the global level and assesses the extent and nature of the changes that have taken place. This analysis is framed by the debate about the role of ideas in post-crisis policy change, the theme of this special section of the British Journal of Politics and International Relations.The pre-crisis global financial system was characterised by a system of 'marketbased' financial governance resting on 'soft law' mechanisms (Brummer 2012) across national, regional, and global levels and that significantly enhanced the role bs_bs_banner According to the 'punctuated equilibrium' model of ideas and the policy process, the combination of the pre-crisis evidence plus the enormous shock beginning in 2007-08 should have proven a clear alibi for a 'third order' paradigm shift in the policy approach (Hall 1993). Blyth (2013) elaborates further on the conditions for a third-order...

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Domestic policy choices, political institutional change, and financial globalization¹

Cited by 5 publications

References 17 publications

International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

Partisanship and the Path to Financial Openness

The Emerging Post-Crisis Financial Architecture: The Path-Dependency of Ideational Adverse Selection

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Domestic policy choices, political institutional change, and financial globalization1

Cited by 5 publications

References 17 publications

International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

Partisanship and the Path to Financial Openness

The Emerging Post-Crisis Financial Architecture: The Path-Dependency of Ideational Adverse Selection

Contact Info

Product

Resources

About

Domestic policy choices, political institutional change, and financial globalization¹