Cooperation in the global village: social globalization and the impact of international law on monetary policy

This paper examines the micro-foundations of the domestic sources of compliance with international agreements, specically Article 8 of the IMF Articles of Agreement. While global economic interdependence increases formalized cooperation between states, domestic resistance against negative impacts of international agreements may also raise the pressure on governments to not comply. Based on ndings from experiments in behavioral economics, I argue that social global integration can alleviate this pressure towards non-compliance. More integrated domestic audiences develop a higher propensity toward cooperation and are less likely to tolerate non-compliant decisions by their governments. I test this hypothesis with a recent dataset that captures the social dimension of globalization and apply it to data from 27 years of Article 8 commitments. The analysis shows that democracies with higher levels of international interactions between domestic societies display signicantly lower rates of non-compliance with Article 8, even in adversary conditions.