International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability

States ’ decisions about regulating international capital movements are shaped in part by institutions and partisanship at the domestic level, but the effects of domestic-level variables are themselves contingent on the constraints imposed by the international system. We amend the vetoplayers hypothesis to account for the effects of international regimes on the political influence of domestic players in state decision-making. The history of changes in international financial regulations over the past four decades provides an ideal case to study the interaction of international regimes and domestic decision-making systems. We create a data set of all capital controls policy changes that 19 OECD parliamentary democracies made during the years 1951–1998. Using these new data, we find that states with a higher number of veto-player parties in government enact fewer capital controls policy changes. Furthermore, ideologically right-of-center governments in these industrialized countries are more likely than others to enact capital controls liberalizations.