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Endogenous changes in the exchange rate regime: A bureaucratic incentive model

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Author Info
Iljoong Kim
Inbae Kim ()
Abstract

Public choice submits that legal changes can be endogenous in such a way that they are manipulated by bureaucrats who want to maximize rents from transactions with various interest groups. This paper takes the change in exchange rate regimes to empirically examine the premise. It offers a two-stage method, in which we first show that the exchange rate is influenced by interest group pressures, and subsequently that the 1990 market average regime (MAR), as a phase-in policy in Korea, was introduced mainly to serve bureaucratic incentives. This method is expected to be useful to a host of countries for various studies attempting to test a possible existence of bureaucratic or other hidden motivations behind any “isolated'' event of policy change. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11127-005-4601-2
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Publisher Info
Article provided by Springer in its journal Public Choice.

Volume (Year): 125 (2005)
Issue (Month): 3 (December)
Pages: 339-361
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:pubcho:v:125:y:2005:i:3:p:339-361

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  12. Edwards, Sebastian, 1996. "Exchange Rates and the Political Economy of Macroeconomic Discipline," American Economic Review, American Economic Association, vol. 86(2), pages 159-63, May. [Downloadable!] (restricted)
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  20. Kristian Nilsson & Lars Nilsson, 2000. "Exchange Rate Regimes and Export Performance of Developing Countries," The World Economy, Blackwell Publishing, vol. 23(3), pages 331-349, 03. [Downloadable!] (restricted)
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  22. Savvides, Andreas, 1990. "Real exchange rate variability and the choice of exchange rate regime by developing countries," Journal of International Money and Finance, Elsevier, vol. 9(4), pages 440-454, December. [Downloadable!] (restricted)
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