International and Domestic Constraints on Political Business Cycles in OECD Economies

1998 ◽  
Vol 52 (1) ◽  
pp. 87-120 ◽  
Author(s):  
William Roberts Clark ◽  
Usha Nair Reichert ◽  
Sandra Lynn Lomas ◽  
Kevin L. Parker
Keyword(s):  
Capital Mobility ◽  
Macroeconomic Policy ◽  
Individual Country ◽  
Political Business Cycles ◽  
Financial Flows ◽  
Mobile Capital ◽  
Domestic Constraints ◽  
Pooled Time Series ◽  
Institutional Choices ◽  
National Control

The effect of increased capital mobility on the national control of macroeconomic policy continues to be a topic of debate. Empirical contributions to this debate share the assumption that domestic macroeconomic policy is driven by either partisan or countercyclical motivations, and that the effects of international financial flows have roughly similar effects in all countries. This article reevaluates the integration hypothesis in a framework in which manipulations of the macroeconomy derive from opportunistic motivations. The article emphasizes the ways in which prior institutional choices effect the way these motivations are translated into actions. Evidence from individual country and pooled time-series tests suggests that opportunistic cycles are less likely to occur when (1) a government maintains a fixed exchange rate in the presence of highly mobile capital or (2) when the central bank enjoys above-average independence.

Funding the Welfare State: Globalization and the Taxation of Business in Advanced Market Economies

1998 ◽  
Vol 46 (4) ◽  
pp. 671-692 ◽  
Author(s):  
Duane Swank
Keyword(s):  
Capital Markets ◽  
Capital Mobility ◽  
Global Economy ◽  
Business Taxation ◽  
Alternative View ◽  
Domestic Investment ◽  
Economic Management ◽  
International Capital Mobility ◽  
Mobile Capital ◽  
Government Responsiveness

Theorists assert that international capital mobility creates substantial pressure for all democratically elected governments to decrease tax burdens on business. I explicate and critique the general version of this theory and offer an alternative view. Empirically, I explore whether or not the globalization of capital markets has resulted in decreases in business social security, payroll, and profit taxes. I also investigate whether or not capital mobility has intensified government responsiveness to domestic investment and profitability. Evidence suggests that business tax burdens have not been reduced in the face of rises in capital mobility nor is tax responsiveness to profitability and domestic investment intensified by more open capital markets. To the contrary, analyses indicate that business taxation has become subject to new ‘market conforming’ policy rules that developed in tandem with liberalization of markets. These new policy orientations reduce the economic management roles of business taxation while leaving the revenue-generating roles intact. In conclusion, I discuss the implications of the findings for questions concerning the structural power of internationally mobile capital, redistributive policies, and the autonomy of democratically elected governments in a global economy.

scholarly journals Official Financial Flows, Capital Mobility, and Global Imbalances

2014 ◽  
Vol 14 (199) ◽  
pp. 1 ◽  
Author(s):  
Tamim Bayoumi ◽  
Joseph Gagnon ◽  
Christian Saborowski ◽  
◽  
◽  
...  
Keyword(s):  
Capital Mobility ◽  
Global Imbalances ◽  
Financial Flows

scholarly journals Official Financial Flows, Capital Mobility, and Global Imbalances

2014 ◽  
Author(s):  
Tamim Bayoumi ◽  
Joseph Gagnon ◽  
Christian Saborowski
Keyword(s):  
Capital Mobility ◽  
Global Imbalances ◽  
Financial Flows

Conclusion

2021 ◽  
pp. 149-162
Author(s):  
Jack Copley
Keyword(s):  
Civil Society ◽  
Capital Mobility ◽  
Financial Liberalization ◽  
Light Touch ◽  
Financial Flows ◽  
Early Twenty ◽  
The World ◽  
Financial Governance ◽  
Late Twentieth ◽  
British State

This chapter reiterates the key arguments and findings of the book. The British state pursued financial liberalization in the 1970s and 1980s in an attempt to reconcile the demands of domestic civil society with the suffocating, impersonal pressures of the global economic crisis on Britain’s balances with the rest of the world. Financialization was an accidental result, not an intended outcome. In addition, this chapter explores how the four liberalizations examined here impacted upon the trajectory of financialization in the late twentieth and early twenty-first centuries. Britain’s liberalization of its financial sector boosted global capital mobility, and thus created powerful pressures on other states to follow suit, contributing to a dynamic of competitive deregulation that spread around the world. Further, the arm’s-length, depoliticized design of the 1986 FSA generated an institutional path dependency, whereby future British systems of financial governance would take a similarly light-touch form. This meant that London would incubate a series of banking scandals in the 1990s, as well as being home to some of the riskiest financial practices exposed by the 2008 crisis. Finally, the growing financial flows unleashed by the liberalizations of the 1970s and 1980s were increasingly channelled into the housing market, resulting in Britain’s particular dynamic of housing-centric financialization.

scholarly journals International banking and financial fragility: the role of regulation in Brazil and Mexico, 1967–1982

2021 ◽  
pp. 1-30
Author(s):  
Sebastian Alvarez
Keyword(s):  
Capital Mobility ◽  
Debt Crisis ◽  
Capital Controls ◽  
International Banking ◽  
Financial Flows ◽  
International Debt ◽  
Determining Factors ◽  
Mobility System ◽  
The Relationship

The shortcomings and potential dangers of international financial flows for the health and stability of domestic banking systems in developing countries have been copiously discussed over the last decades. While the importance of capital controls and regulation as determining factors has been widely emphasised, the extent to which these policies work in episodes of financial crisis is still a matter of debate. This article examines the relationship between supervisory frameworks and banking fragility in Mexico and Brazil in the wake of the international debt crisis of 1982. It shows that the model of international banking intermediation that evolved out of the stringent capital mobility system in Brazil was considerably less vulnerable to crisis than in Mexico, which had a more lightly regulated regime. These findings provide insights into historical debates about the implications of prudential regulation and capital controls for the development and expansion of foreign finance, and whether the risks underlying international banking are necessarily inherent in the process of financial globalisation.

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