Why are realignments postponed? A model of exchange rate revisions with opportunistic governments
AbstractIn this paper we investigate the consequences of elections on the willingness of office-motivated governments to defend a pre-announced parity in the presence of output shocks in a fixed exchange rate regime with an escape clause. Knowing that voters rationally interpret realignments as a sign of incompetence, incumbents refrain from realigning before elections. They can do so either when they are competent or when shocks are small enough. Realignments are therefore more likely and output is less volatile on the morrow than on the eve of elections. The welfare impact of elections is ambiguous. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2004.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Manchester in its journal The Manchester School.
Volume (Year): 72 (2004)
Issue (Month): 3 (06)
Contact details of provider:
Postal: Manchester M13 9PL
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
Other versions of this item:
- Pierre-Guillaume Méon, 2004. "Why are realignments postponed? A model of exchange rate revisions with opportunistic governments," ULB Institutional Repository 2013/8380, ULB -- Universite Libre de Bruxelles.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bussiere, Matthieu & Mulder, Christian, 2000.
"Political Instability and Economic Vulnerability,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 5(4), pages 309-30, October.
- Klein, Michael W. & Marion, Nancy P., 1997.
"Explaining the duration of exchange-rate pegs,"
Journal of Development Economics,
Elsevier, vol. 54(2), pages 387-404, December.
- Leonardo Bartolini & Allan Drazen, 1998.
"When Liberal Policies Reflect External Shocks, What Do We Learn?,"
NBER Working Papers
5727, National Bureau of Economic Research, Inc.
- Bartolini, Leonardo & Drazen, Allan, 1997. "When liberal policies reflect external shocks, what do we learn?," Journal of International Economics, Elsevier, vol. 42(3-4), pages 249-273, May.
- Leonardo Bartolini & Allan Drazen, 1996. "When liberal policies reflect external shocks, what do we learn?," Staff Reports 18, Federal Reserve Bank of New York.
- Ernesto H. Stein & Jorge M. Streb, 1997.
"Political Stabilization Cycles in High Inflation Economies,"
CEMA Working Papers: Serie Documentos de Trabajo.
123, Universidad del CEMA.
- Stein, Ernesto H. & Streb, Jorge M., 1998. "Political stabilization cycles in high-inflation economies," Journal of Development Economics, Elsevier, vol. 56(1), pages 159-180, June.
- Ernesto Stein and Jorge Streb., 1994. "Political Stabilization Cycles in High Inflation Economies," Center for International and Development Economics Research (CIDER) Working Papers C94-039, University of California at Berkeley.
- James Forder, 2001. "The Theory of Credibility and the Reputation-bias of Policy," Review of Political Economy, Taylor & Francis Journals, vol. 13(1), pages 5-25.
- Cermeño, Rodolfo & Grier, Robin & Grier, Kevin, 2010. "Elections, exchange rates and reform in Latin America," Journal of Development Economics, Elsevier, vol. 92(2), pages 166-174, July.
- Axel Dreher & Stefanie Walter, 2008.
"Does the IMF Help or Hurt? The Effect of IMF programs on the likelihood and outcome of currency crises,"
KOF Working papers
08-186, KOF Swiss Economic Institute, ETH Zurich.
- Dreher, Axel & Walter, Stefanie, 2010. "Does the IMF Help or Hurt? The Effect of IMF Programs on the Likelihood and Outcome of Currency Crises," World Development, Elsevier, vol. 38(1), pages 1-18, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.