How do domestic political factors interact with global economic forces, and with past choices regarding economic policy? The majority of this book is concerned with specifying the nature of financial market pressures on government policymaking. By providing a causal mechanism linking financial globalization with government policy outcomes, this endeavor greatly enhances our understanding of government policymaking in an era of financial globalization. In order to understand fully this linkage, and the process by which cross-national policy divergence occurs, however, a second causal mechanism – the effect of financial market pressures within domestic politics – is necessary. We need to connect events in global capital markets with changes in government policy, and we must consider how various domestic institutions and ideologies mediate these changes.