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Democratic Institutions and Exchange-rate Commitments

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Author Info
Bernhard, William
Leblang, David
Abstract

From the end ofWorld War II until 1971, exchange-rate practices were governed by the BrettonWoods system (or the dollar standard) an international regime of fixed exchange rates with the U.S. dollar serving as the anchor currency. The system operated smoothly through the 1950s, but strains appeared in the 1960s, reflecting a combination of the gold overhang and lax U.S. macroeconomic policies. In 1971 the Nixon administration slammed the gold window shut, effectively ending the Bretton Woods system. Since the early 1970s, countries have been able to choose a variety of exchange-rate regimes ranging from a freely floating exchange rate to one that is rigidly fixed to that of another country.We examine the exchange-rate arrangements adopted by the industrial democracies since 1974. We focus on domestic political institutions to explain a government's choice among three main exchange-rate options: a floating exchange rate, a unilateral peg, and a multilateral exchange-rate regime (specifically, the Snake and the EuropeanMonetary System).

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Publisher Info
Article provided by Cambridge University Press in its journal International Organization.

Volume (Year): 53 (1999)
Issue (Month): 01 (January)
Pages: 71-97
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cup:intorg:v:53:y:1999:i:01:p:71-97_44

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  1. Thomas Plümper and Eric Neumayer, 2008. "Exchange Rate Regime Choice with Multiple Key Currencies," The Institute for International Integration Studies Discussion Paper Series iiisdp264, IIIS. [Downloadable!]
  2. Nathan M. Jensen Washington University, Rene Lindstadt, Trinity College Dublin, 2009. "Leaning Right and Learning from the Left: Diffusion of Corporate Tax Policy in the OECD," The Institute for International Integration Studies Discussion Paper Series iiisdp290, IIIS. [Downloadable!]
  3. Beth Simmons & Jens Hainmueller, 2005. "Can Domestic Institutions Explain Exchange Rate Regime Choice? The Political Economy of Monetary Institutions Reconsidered," International Finance 0505011, EconWPA. [Downloadable!]
  4. Christopher Meissner & Nienke Oomes, 2006. "Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice," WEF Working Papers 0009, ESRC World Economy and Finance Research Programme, Birkbeck, University of London. [Downloadable!]
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  5. Ernesto H. Stein & Jeffry Frieden, 2000. "The Political Economy of Exchange Rate Policy in Latin America: An Analytical Overview," RES Working Papers 3118, Inter-American Development Bank, Research Department. [Downloadable!]
  6. Ernesto H. Stein & Jeffry Frieden & Piero Ghezzi, 2000. "Politics and Exchange Rates: A Cross-Country Approach to Latin America," RES Working Papers 3119, Inter-American Development Bank, Research Department. [Downloadable!]
  7. Vladimir Klyuev, 2003. "The Distributional Consequences of Real Exchange Rate Adjustment," IMF Working Papers 03/133, International Monetary Fund. [Downloadable!]
  8. S. Brock Blomberg & Jeffry Frieden & Ernesto Stein, 2005. "Sustaining fixed rates: The political economy of currency pegs in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 203-225, November. [Downloadable!]
  9. Mehmet Guclu, 2008. "The Determinants of Exchange Rate Regimes in Emerging Market Economies," Working Papers 0806, Ege University, Department of Economics. [Downloadable!]
  10. Pasricha, Gurnain Kaur, 2008. "Imperfect Competition in Financial Markets and Capital Controls: A Model and a Test," MPRA Paper 12125, University Library of Munich, Germany. [Downloadable!]
  11. Vladimir Klyuev, 2001. "A Model of Exchange Rate Regime Choice in the Transitional Economies of Central and Eastern Europe," IMF Working Papers 01/140, International Monetary Fund. [Downloadable!]
  12. Iljoong Kim & Inbae Kim, 2005. "Endogenous changes in the exchange rate regime: A bureaucratic incentive model," Public Choice, Springer, vol. 125(3), pages 339-361, December. [Downloadable!] (restricted)
  13. von Hagen, Jürgen & Zhou, Jizhong, 2004. "The Choice of Exchange Rate Regime in Developing Countries: A Multinational Panel Analysis," CEPR Discussion Papers 4227, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Mehmet Güçlü, 2008. "The Determinants of Exchange Rate Regimes in Emerging Market Economies," Papers of the Annual IUE-SUNY Cortland Conference in Economics, in: Proceedings of the Conference on Emerging Economic Issues in a Globalizing World, pages 177-191 Izmir University of Economics. [Downloadable!]
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