INTERNATIONAL CRISES AND DOMESTIC POLITICS

Audience costs enable leaders to make credible commitments and to comm unicate their intentions to their adversaries during a crisis. I expla in audience costs by simultaneously modeling crisis behavior and the d omestic reelection process. I assume that a leader's ability influence s the outcome of a crisis. As such voters use outcomes as a signal of their leaders' quality. Leaders have incentives to make statements tha t deter their enemies abroad, since these statements also enhance thei r standing at home. Yet, such ''cheap talk'' foreign policy declaratio ns are only credible when lenders suffer domestically if they fail to fulfill their commitments. In equilibrium, false promises are only mad e by the least competent types of leaders. Lenders brat break their pr omises suffer electorally. Because initial domestic conditions and ins titutional arrangements affect the vulnerability of leaders to these d omestic costs, such factors influence the credibility of policy declar ations and, therefore, the crisis outcome.