Formal and Informal Institutions and the Regulation of Flows of Money
- Michael J. LeeMichael J. LeeDepartment of Political Science, Hunter College, City University of New York
When academics explore the politics of international monetary regulation, they tend to focus on three more specific policy challenges, each with attendant tradeoffs. Explaining how the global system has addressed these tradeoffs across time and space is at the core of the political science literature on the regulation of international monetary flows. Many political scientists are interested in the politics of macroeconomic imbalances. Some countries operate current account surpluses, while others operate deficits, placing downward pressure on their currency. One of the key questions examined by the political science literature on this subject is that of who adjusts. Moreover, some works discuss how domestic politics constrains and informs the positions of leaders. Other works discuss the role of international summits and organizations in facilitating cooperation. Others, in turn, explore how ideas shape our understanding of adverse events, and thus, which actors adjust to crises. Other political scientists are interested in regulatory matters. Some argue that in a world where capital mobility is high, the ability for states to regulate their financial systems may be constrained, fostering a race to the bottom. At the same time, much of the literature explores how issues of hegemonic interests, domestic politics, and ideational contestation enable the creation and implementation of some forms of global, though not others. Finally, many works explore how the system responds to currency crises.