Domestic Politics of International Financial Rescues: Congressional Voting on Bailouts in the 1990s

665_broz.pdf230 KB


In the 1990s, the American Executive organized financial rescues of Mexico and several Asian economies. These rescues ("bailouts" to detractors) were controversial in Congress, where members voted repeatedly on legislation to reduce or eliminate the Executive's freedom to engage in them. I analyze voting on bailouts in the House of Representatives between 1995 and 1999 with an eye toward explaining who opposes and who supports bailouts. I argue that the relative income effects of global economic integration influence congressional positions on international bailouts. A key finding, which follows from Stolper–Samuelson reasoning, is that a House member is significantly more likely to oppose the Executive's pro–bailout agenda as the proportion of low–skilled workers in a district increases. Results suggest that the recent globalization backlash extends to international financial policy, which is not surprising since the same economic forces generating losers by way of trade and immigration operate with respect to capital flows.



Last updated on 03/27/2015