| Deepening globalization over the last few decades has magnified long-standing tensions between states and markets. My dissertation examines these tensions by exploring political behavior during Latin American elections in a globalized world. It employs a multi-method research strategy to explain a fascinating puzzle: why have many of Latin America's chief executives embraced economic austerity before elections? Political-economic theory uniformly assumes that politicians operating in settings like Latin America are both opportunistic and institutionally weakly constrained, and will use whatever means necessary to secure an electoral victory. They are expected to hit the economy's gas pedal before elections, calculating that an accelerated economy---even at the cost of inflation---will yield more votes.;But Latin American economies do not shift into a high-growth, high-inflation phase before elections. In fact, a chapter of my dissertation shows that politicians take the opposite actions from the one this theory would predict; in recent decades, they hit the brakes before elections. They exhibit strict fiscal discipline and tight monetary policy. My large-N test of 16 Latin American countries, observed between 1961 and 2006, shows that, after the 1980s, Latin American economies did not undergo political business cycles. What explains this striking fact?;In my dissertation, I argue that two structural shocks have led to a reversal of the political business cycle. The first shock was the dramatic shift from a centralized to decentralized external financing regime after the 1980s debt crisis. A heavy reliance on globally capital markets muffled Latin American governments' voice and influence in their lending relationship with international creditors, curtailing their ability to fund economic expansions.;The second shock was Latin America's 1980s hyperinflation trauma. Hyper-inflation not only led to the breakdown of economic and social order, but also left a lasting mark on the Latin American consciousness. It chiseled into policymakers' minds that election-period expansions had grave consequences. In the short-run economic trade-off between jobs and inflation, they came to value inflation stabilization more highly than growth. Strikingly, presidents reinterpreted the traditional political logic, opting to limit their election-year outlays to appease not only markets, but also an inflation-sensitive electorate. |
