Societal Preferences and Economic Policy Outcomes: A Bargaining Power Theory of Economic Policy Formation.

What role, if any, does political competition play in states' economic decision-makingprocesses? Most studies examining economic policies have tended to overlook this question,choosing to focus instead on questions of how economic policy preferences are formed, andrelying on an assumption that the relative reflection of different preferences in society translatesdirectly into policy outcomes. Addressing this question, I analyze the political decision-makingprocess using a 'bargaining' framework. Addressing the 'economic pluralist' literature, I arguethat the size of groups holding different preferences is a component of bargaining power, but it isnot sufficient, on its own to explain economic policy outcomes. Rather, group size interacts withother institutional components of bargaining power to influence states' economic policy choices.I then use this bargaining framework to analyze states' choice between exchange rate stabilityand monetary policy autonomy under a high degree of international capital mobility. Testingthis argument on this economic policy choice, I use a cross-sectional time-series statistical modelto analyze the economic policies of twenty-one OECD countries and interpret these findings. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]