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Congressional Politics of International Financial Rescues

Authors


  • For research assistance, I thank Mark Farrales, Stephanie Rickard, Joseph Gochal, and Sarah Matthews. For comments, I am grateful to participants at the Research Group on Political Institutions and Economic Policy (PIEP) conference, Harvard University; the Political Economy of International Finance (PEIF) conference, Georgetown University; and the Politics Department Seminar, New York University. I am particularly indebted to Jeffry Frieden, Tom Romer, Howard Rosenthal, Bruce Bueno de Mesquita, Gary Cox, Jude Hayes, Brian Roberts, John Freeman, Benjamin Cohen, Ken Scheve, Allen Kessler, and Alex Kuo.

J. Lawrence Broz is associate professor of political science, University of California, San Diego, 9500 Gilman Dr. M/C 0521, La Jolla, CA 92093-0521 (jlbroz@ucsd.edu).

Abstract

In the 1990s, the American executive organized financial rescues for Mexico and several Asian economies. These rescues were controversial in Congress, where members voted repeatedly to reduce or eliminate the executive's freedom to engage in them. I analyze these roll calls with an eye toward explaining who opposes and who supports international financial rescues. I argue that the interests of private actors (district constituencies and interest groups) have an important effect on member voting. Following Stolper-Samuelson reasoning, I find that a member is significantly more likely to favor (oppose) rescues as the proportion of high-skilled (low-skilled) workers in a district increases. In addition, I find that campaign contributions from international banks increase the probability that a member will vote in favor of rescues. Overall, the findings suggest that the distributional effects of rescues find expression in Congress and constrain U.S. international financial policymaking.

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