Capital Mobility and State Autonomy: Toward a Structural Theory of International Monetary Relations

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Abstract
This article argues that the degree of capital market integration between states meets even the restrictive criteria established by structural realists for consideration as a structural feature of international politics; that is to say, the degree of international capital mobility systematically constrains state behavior by rewarding some actions and punishing others. Key terms are defined, and a heuristic model of the “capital mobility hypothesis” is introduced. Evidence from both U.S.-Japanese and intra-European monetary relations appears to corroborate the model. However, since the distribution of costs generated by monetary independence under conditions of relatively mobile capital can be asymmetrical, caution is warranted when generalizing about the effects of heightened capital mobility on individual states' monetary autonomy.

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