In an age of internationally mobile capital, how is government policy choice constrained by financial markets? Despite significant research on the subject, this question has not been addressed satisfactorily. Some political scientists claim that financial market pressures produce a convergence of national economic policies. Others argue that national governments remain autonomous from financial market pressures.) This Doctoral Dissertation Research project employs evidence from interviews with financial market participants, along with quantitative analyses and case studies, to describe the interaction between financial market operation and government policy choice in advanced industrial democracies. The student first investigates the nature of the financial market constraints: when making investment decisions, which aspects of government policy do investors consider? How strongly do investors react to changes in these policy areas? I then explore the implications of these financial market pressures for government policy choice. The student concludes that governments of developed nations are strongly constrained by financial market pressures, albeit in only a few macro-policy areas. Many policy outcomes in the 1980s and 1990s are explained not by financial globalization, but by domestic political factors. National Science Foundation support improves this dissertation by funding additional interviews with financial market participants. These interviews gauge changes over time in the financial market participants. These interviews gauge changes over time in the financial market constraint and expand the scope of the project to developing nations.
