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Do international lenders of last resort create financial instability by generating moral hazard? The evidence is thin and plagued with measurement error. We use the number of American troops hosted by third countries to measure the strength of American commitment to ensuring the countries' economic health. We test several hypotheses against a dataset covering about sixty-eight countries between 1960 and 2009. Using evidence from fixed-effects and instrumental-variable models, we find that increasing the number of US troops by one standard deviation above the mean raises the probability of a financial crisis in the host country by up to 13 percentage points. We also investigate the channels through which moral hazard materializes. Countries with more US troops conduct more expansionary fiscal and monetary policies, implement riskier financial regulations, and receive more capital, especially from US banks. While many scholars of international relations view the American overseas military presence as a source of stability, we identify an underexplored mechanism by which it generates instability. [ABSTRACT FROM AUTHOR]

Environmental ministries have become increasingly common, but the determinants of their global spread remain only partially understood. We develop a theory of domestic-international interactions in the global adoption of environmental ministries. We argue that domestic factors can sensitize a country to different types of international influence: foreign pressure, external support for capacity building, and learning effects. Empirically, we examine the global spread of environmental ministries, 1960-2009. We find that countries have strong incentives to establish environmental ministries when they are undergoing a democratic transition and environmental problems are salient at the international level. In other words, the democratization of a country allows international factors to promote the formation of a national environmental ministry. The findings contribute to the study of domestic-international linkages and help understand global trends in environmental governance during a period of unprecedented environmental destruction. [ABSTRACT FROM AUTHOR]