Currency Politics: The Political Economy of Exchange Rate by Jeffry A. Frieden

By Jeffry A. Frieden

The trade cost is crucial cost in any financial system, because it impacts all different costs. trade charges are set, both at once or not directly, by means of govt coverage. trade charges also are primary to the worldwide economic system, for they profoundly effect all overseas monetary task. regardless of the serious position of trade cost coverage, there are few definitive causes of why governments pick out the foreign money regulations they do. jam-packed with in-depth situations and examples, Currency Politics provides a accomplished research of the politics surrounding trade charges.

Identifying the motivations for forex coverage personal tastes at the a part of industries looking to impression politicians, Jeffry Frieden exhibits how every one industry's characteristics--including its publicity to foreign money possibility and the fee results of alternate expense movements--determine these personal tastes. Frieden evaluates the accuracy of his theoretical arguments in numerous old and geographical settings: he appears on the politics of the most reliable, rather within the usa, and he examines the political financial system of ecu financial integration. He additionally analyzes the politics of Latin American foreign money coverage over the last 40 years, and makes a speciality of the daunting forex crises that experience often debilitated Latin American international locations, together with Mexico, Argentina, and Brazil.

With an bold mixture of narrative and statistical research, Currency Politics clarifies the political and financial determinants of trade cost policies.

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Extra resources for Currency Politics: The Political Economy of Exchange Rate Policy

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This would seem to ignore the international strategic dimension of national currency policy. After all, one country’s exchange rate is only meaningful in relation to that of other countries. There is a long history of international agreements, negotiations, and conflicts over currencies, all of which require systematic analysis of the strategic setting. For this analysis, the preferences of domestic socioeconomic actors are simply raw material—essential raw material, but only one component of the broader picture.

I believe that this can provide building blocks for a broader analysis of the politics of exchange rates. The rest of this chapter develops my argument in detail. It starts with a statement of the things I am trying to explain—the dependent variables of the study. I then present my reasoning and the empirical expectations that flow from it. This is followed by a brief summary of other scholarly studies of the economics and politics of exchange rates in order to situate this study within the broader literature The Dependent Variable: Interests in the Exchange Rate I am interested in explaining the currency policy preferences of domestic socioeconomic groups.

For the former, support for a depreciation outweighs whatever preferences they may have over the regime; for the latter, support for a fixed rate outweighs preferences over its level. This is more empirical observation than theory, yet it allows me to specify the groups most likely to find themselves in each camp. The principal supporters of a fixed exchange rate are, I anticipate, to be found among those who face substantial foreign exchange risk (high international exposure or limited pass-­through).

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