Societal Preferences, Bargaining Power and Economic Policy Outcomes.

What role, if any, does political competition play in states' economic decision-making processes? Most studies examining economic policies have tended to overlook this question, choosing to focus instead on questions of how economic policy preferences are formed, and relying on an assumption that the relative reflection of different preferences in society translates directly into policy outcomes. Addressing this question, I analyze the political decision-making process using a 'bargaining' framework. Within this context, I argue that rather than mere group size, the relative bargaining power of different societal preferences within the state institutions influences economic policy outcomes. Addressing the 'economic pluralist' literature, I show that the size of groups holding different preferences is a component of bargaining power, but it is not sufficient, on its own to explain economic policy outcomes. I then use this framework to examine one important economic policy choice highlighted by the Mundell-Flemming model - the choice between exchange rate stability and monetary policy autonomy under a high degree of international capital mobility. Testing this argument on this economic policy choice, I use a cross-sectional time-series statistical model to analyze the economic policies of twenty-one OECD countries and interpret these findings. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]