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This paper investigates how changes in both institutional incentives and economic interests are important for securing durable changes in economic policy. We study how bipartisan support developed to sustain the Reciprocal Trade Agreements Act (RTAA) of 1934, which fundamentally transformed U.S. trade policy. The durability of this change was achieved only when the Republicans, long‐time supporters of high tariffs who originally vowed to repeal the RTAA, began to support this Democratic initiative in the 1940s. We find little evidence of an ideological shift among Republicans, but rather an increased sensitivity to export interests for which the institutional structure of the RTAA itself may have been responsible. We conclude that the combination of greater export opportunities and the institutional change that strengthened exporters' lobbying position was required to bring about Republican support for trade liberalization.

Today's financial system is dominated by markets with institutions connected by short-term financing, securitization, derivatives, and other means. Yet regulations have focused on depositories, leaving regulators unprepared for the 2008 crisis. We suggest two key principles for regulatory reform. First, some changes in the financial system came as institutions lowered the burden of regulations through "regulatory arbitrage." Reform needs to avoid driving businesses "into the shadows," where risks may accumulate and sow seeds of future crises. Second, reform ought to improve transparency to reduce uncertainty and inter-linkages between players. We evaluate some of Dodd-Frank Act in light of these principles.

Interest groups cannot enforce contracts with legislators to work in their favor since fee-for-service agreements would be considered bribery. When such contracts are not available, a system of specialized, standing committees can provide a second-best way to maximize contributions, since such a system facilitates repeated interactions and reputational development between PACs and members of the relevant committees. Using data on PAC contributions by competing financial services interests to members of the House Banking Committee, we find evidence consistent with key implications of our model of committees as reputational-development devises. We then interpret important episodes in the evolution and development of the committee system during the twentieth century from the perspective of our theory. We focus on the revolt against House Speaker Cannon, which resulted in the birth of the modern committee system, and the post-Watergate reforms. We also consider broader implications of this approach for analyzing term limits, corruption, and party strength. JEL classifications: D72, D78, G28.

This paper analyzes the consequences of alternative financial structures for financial efficiency and stability. The focus is on the organizational structure of banks. Alternative bank structures range from `narrow banks` to broad `universal banks. ` Each banking structure is assessed in its ability to satisfy the objectives of efficiency and stability in the financial system stability, economies of scale and scope, competition, avoiding regulatory capture, conflicts of interest and political manipulation, corporate control and management of financial distress, and monetary control. No one reform is appropriate for all countries, and no single reform guarantees that the objectives will be attained or maintained.