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Political Science
Lilach Gilady

Lastly, Simmons poses yet another interpretation to understanding the dynamics of the international political economy. Simmons takes an approach that considers domestic policy makers’ objections and constraints when deciding on trade policies. Her research in the area leads her to analyze three domestic factors that influence each actor’s perception of who is most likely to defect from the rules of the international economic game. She suggests that political ideologies set a trend in countries’ objectives to cooperate or defect. Evidence shows that although left polities encourage trade liberalization, they are more likely to devalue their currency if it means bettering the conditions for their labour force. On the other hand, right-wing polities may practice protectionist measures but nevertheless they aim to maintain currency stability. Simmons also argues that political stability matters. She claims that weak governments with short time horizons are more likely to allow their currency to devalue because they are less concerned with long-term effects of their policy implications. Inflation controls often are too costly for weak governments to set in place, so they adjust by adopting policies that push their financial problems onto trade partners. Lastly, Simmons points to the structure of domestic economic institutions such as central banks. She claims that central banks who have a greater degree of independence from the government tend to carry out policies of monetary stability even if it may not be politically optimal in the short run. This is because independent banks are not accountable to people in the same way the government is, so they tend to base their policy decisions on economic
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