IDEAS home Printed from https://ideas.repec.org/a/sae/intare/v18y2015i3p227-250.html
   My bibliography  Save this article

American and Chinese leadership during the global financial crisis: Testing Kindleberger’s stabilization functions

Author

Listed:
  • Carla Norrlof

    (University of Toronto, Canada)

  • Simon Reich

    (Rutgers-Newark, New Jersey, USA)

Abstract

Heavily reliant on the work of Charles P Kindleberger, theories of hegemony and power transition have been built on the largely unchallenged assumption that the United States acts as a global economic stabilizer in time of crisis. However, there has been no attempt systematically to delineate, operationalize and test whether the United States performs this role utilizing Kindleberger’s five functions. Proponents of these theories have, in contrast, characterized China as either a free-rider or a predator waiting to challenge American leadership in times of crisis. In evaluating these characterizations, we test two hypotheses that examine the extent to which the United States and China have performed these stabilizing functions with regard to three major economic crises (the 1997 Asian economic crisis, the 2001 “DotCom†crisis and the Great Recession of 2007–2009). Our findings suggest that Kindleberger’s functions are more evenly shared than conventional scholarship would predict and that China has played a supportive, stabilizing role. Without evidence of explicit collaboration between the two countries, these functions were shared. Furthermore, China played an increasingly important role in supporting the global economic system over time and the trend line suggests they will continue to do so in the future. If Kindleberger’s criteria are correct, the assumption of a single country, the United States, acting as a stabilizer is therefore empirically mistaken. If his criteria are flawed, major IR theories that have assumed the criteria to be true and/or have assumed that the United States plays this unique role in the global economy are in need of critical reassessment.

Suggested Citation

  • Carla Norrlof & Simon Reich, 2015. "American and Chinese leadership during the global financial crisis: Testing Kindleberger’s stabilization functions," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 18(3), pages 227-250, September.
  • Handle: RePEc:sae:intare:v:18:y:2015:i:3:p:227-250
    DOI: 10.1177/2233865915573638
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/2233865915573638
    Download Restriction: no

    File URL: https://libkey.io/10.1177/2233865915573638?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Keohane, Robert O., 1982. "The demand for international regimes," International Organization, Cambridge University Press, vol. 36(2), pages 325-355, April.
    2. Helleiner, Eric, 2014. "The Status Quo Crisis: Global Financial Governance After the 2008 Meltdown," OUP Catalogue, Oxford University Press, number 9780199973637.
    3. Paul Conway & Richard Herd & Thomas Chalaux, 2010. "Reforming China's Monetary Policy Framework to Meet Domestic Objectives," OECD Economics Department Working Papers 822, OECD Publishing.
    4. Adam S. Posen, 2008. "Why the Euro will Not Rival the Dollar," International Finance, Wiley Blackwell, vol. 11(1), pages 75-100, May.
    5. Benjamin J. Cohen, 2003. "Can the Euro Ever Challenge the Dollar?," Journal of Common Market Studies, Wiley Blackwell, vol. 41(4), pages 575-595, September.
    6. Helleiner, Eric & Pagliari, Stefano, 2011. "The End of an Era in International Financial Regulation? A Postcrisis Research Agenda," International Organization, Cambridge University Press, vol. 65(1), pages 169-200, January.
    7. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(3), pages 427-460, July.
    8. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
    9. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Is the 2007 US Sub-Prime Financial Crisis So Different?: An International Historical Comparison," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 291-299.
    10. Carla Norrlof, 2014. "Dollar hegemony: A power analysis," Review of International Political Economy, Taylor & Francis Journals, vol. 21(5), pages 1042-1070, October.
    11. Charles P. Kindleberger & Robert Z. Aliber, 2005. "Manias, Panics and Crashes," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-0-230-62804-5, December.
    12. Brian Efird & Jacek Kugler & Gaspare Genna, 2003. "From War to Integration: Generalizing Power Transition Theory," International Interactions, Taylor & Francis Journals, vol. 29(4), pages 293-313, October.
    13. Kindleberger, Charles P., 1986. "Hierarchy versus inertial cooperation," International Organization, Cambridge University Press, vol. 40(4), pages 841-847, October.
    14. Snidal, Duncan, 1985. "The limits of hegemonic stability theory," International Organization, Cambridge University Press, vol. 39(4), pages 579-614, October.
    15. repec:bla:jcmkts:v:41:y:2003:i::p:575-595 is not listed on IDEAS
    16. David Rapkin & William Thompson, 2003. "Power Transition, Challenge and the (Re)Emergence of China," International Interactions, Taylor & Francis Journals, vol. 29(4), pages 315-342, October.
    17. Randall Germain & Herman Schwartz, 2014. "The political economy of failure: The euro as an international currency," Review of International Political Economy, Taylor & Francis Journals, vol. 21(5), pages 1095-1122, October.
    18. Snidal, Duncan, 1991. "Relative Gains and the Pattern of International Cooperation," American Political Science Review, Cambridge University Press, vol. 85(3), pages 701-726, September.
    19. Jonathan Kirshner, 2007. "What Does Finance Want? from Appeasing Bankers: Financial Caution on the Road to War," Introductory Chapters, in: Appeasing Bankers: Financial Caution on the Road to War, Princeton University Press.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Ze & Gao, Xiangyun & Huang, Shupei & Sun, Qingru & Chen, Zhihua & Tang, Renwu & Di, Zengru, 2022. "Measuring systemic risk contribution of global stock markets: A dynamic tail risk network approach," International Review of Financial Analysis, Elsevier, vol. 84(C).
    2. Carsten Rauch, 2017. "A tale of two power transitions: Capabilities, satisfaction, and the will to power in the relations between the United Kingdom, the United States, and Imperial Germany," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 20(3), pages 201-222, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hyoung-kyu Chey & Yu Wai Vic Li, 2016. "Bringing the Central Bank into the Study of Currency Internationalization: Monetary Policy, Independence, and Internationalization," GRIPS Discussion Papers 15-23, National Graduate Institute for Policy Studies.
    2. Hyoung-kyu Chey & Geun-Young Kim & Dong Hyun Lee, 2016. "Who Are the First Users of a Newly-Emerging International Currency? A Demand-Side Study of Chinese Renminbi Internationalization," Working Papers 2016-19, Economic Research Institute, Bank of Korea.
    3. Joel Carbonell & Juliann Allison, 2015. "Democracy and state environmental commitment to international environmental treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 15(2), pages 79-104, May.
    4. Carla Norrlof & William C. Wohlforth, 2019. "Is US grand strategy self-defeating? Deep engagement, military spending and sovereign debt," Conflict Management and Peace Science, Peace Science Society (International), vol. 36(3), pages 227-247, May.
    5. Oran R. Young, 1994. "2. The Problem of Scale in Human/Environment Relationships," Journal of Theoretical Politics, , vol. 6(4), pages 429-447, October.
    6. Hertrich Markus, 2019. "A Novel Housing Price Misalignment Indicator for Germany," German Economic Review, De Gruyter, vol. 20(4), pages 759-794, December.
    7. Beutel, Johannes & List, Sophia & von Schweinitz, Gregor, 2018. "An evaluation of early warning models for systemic banking crises: Does machine learning improve predictions?," Discussion Papers 48/2018, Deutsche Bundesbank.
    8. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, Southern Economic Association, vol. 78(3), pages 999-1018, January.
    9. Stefan Angrick, 2018. "Structural conditions for currency internationalization: international finance and the survival constraint," Review of International Political Economy, Taylor & Francis Journals, vol. 25(5), pages 699-725, September.
    10. Daniel Susskind & David Vines, 2024. "Global economic order and global economic governance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 40(2), pages 189-219.
    11. Sue Wright & Elizabeth Sheedy & Shane Magee, 2018. "International compliance with new Basel Accord principles for risk governance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(1), pages 279-311, March.
    12. Lucia Quaglia & Aneta Spendzharova, 2017. "Post‐crisis reforms in banking: Regulators at the interface between domestic and international governance," Regulation & Governance, John Wiley & Sons, vol. 11(4), pages 422-437, December.
    13. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 999-1018, January.
    14. Stephen, Matthew D. & Parízek, Michal, 2019. "New Powers and the Distribution of Preferences in Global Trade Governance: From Deadlock and Drift to Fragmentation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(6), pages 735-758.
    15. Thomas Rixen, 2013. "Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition," Regulation & Governance, John Wiley & Sons, vol. 7(4), pages 435-459, December.
    16. Júlia Király, 2020. "Hungary and Other Emerging EU Countries in the Financial Storm," Financial and Monetary Policy Studies, Springer, number 978-3-030-49544-2, December.
    17. Roy, Saktinil & Kemme, David M., 2011. "What is really common in the run-up to banking crises?," Economics Letters, Elsevier, vol. 113(3), pages 211-214.
    18. David M. Kemme & Saktinil Roy, 2012. "Did the Recent Housing Boom Signal the Global Financial Crisis?," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 999-1018, January.
    19. Priyanka Pandit, 2013. "China and the World Trade Organization," International Studies, , vol. 50(3), pages 255-271, July.
    20. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:intare:v:18:y:2015:i:3:p:227-250. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.hufs.ac.kr/user/hufsenglish/re_1.jsp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.