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The political economy of adjustment and rebalancing

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  • Frieden, Jeffry

Abstract

Debt and balance of payments crises are politically controversial. In the aftermath of such crises, conflict typically breaks out over how the burden of adjustment will be distributed. There is international conflict, between debtor nations and creditor nations, over how outstanding debts will be resolved. And there is conflict within nations, over who will make the sacrifices necessary to get economies back on track. These political conflicts often become so bitter and protracted that they impede productive bargaining over the adjustment process. The characteristics of socio-economic and political divisions within societies affect the battles over economic adjustment, as well as who will emerge victorious from these battles, and how difficult it may be to arrive at a productive resolution of the crisis.

Suggested Citation

  • Frieden, Jeffry, 2015. "The political economy of adjustment and rebalancing," Journal of International Money and Finance, Elsevier, vol. 52(C), pages 4-14.
    • Handle: RePEc:eee:jimfin:v:52:y:2015:i:c:p:4-14
    DOI: 10.1016/j.jimonfin.2014.11.010
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    2. Jänes, Holger & Macreadie, Peter I. & Zu Ermgassen, Philine S.E. & Gair, Jonathan R. & Treby, Sarah & Reeves, Simon & Nicholson, Emily & Ierodiaconou, Daniel & Carnell, Paul, 2020. "Quantifying fisheries enhancement from coastal vegetated ecosystems," Ecosystem Services, Elsevier, vol. 43(C).
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    6. Stefano Pagliari & Meredith Wilf, 2021. "Regulatory novelty after financial crises: Evidence from international banking and securities standards, 1975–2016," Regulation & Governance, John Wiley & Sons, vol. 15(3), pages 933-951, July.
    7. Campos, Nauro F. & De Grauwe, Paul & Ji, Yuemei, 2025. "Structural reforms and economic performance: the experience of advanced economies," LSE Research Online Documents on Economics 120870, London School of Economics and Political Science, LSE Library.
    8. Steiner, Andreas & Steinkamp, Sven & Westermann, Frank, 2019. "Exit strategies, capital flight and speculative attacks: Europe's version of the trilemma," European Journal of Political Economy, Elsevier, vol. 59(C), pages 83-96.
    9. Vytautas Kuokštis & Simonas Algirdas Spurga, 2025. "The Political Economy of Exchange Rate Regimes and External (Im)Balances: The Role of Labor Market Institutions," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 67(3), pages 682-722, September.
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    12. Mathias Manguzvane & Mduduzi Biyase, 2023. "Exchange rate risk and sovereign debt risk in South Africa: A Regime Dependent Approach," Economics Working Papers edwrg-04-2023, College of Business and Economics, University of Johannesburg, South Africa, revised 2023.

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