Interest group pressure explanations for the yen-dollar exchange rate movements: Focusing on the 1980s
Interest group pressures are always in force. Exchange rate policy, like any other government policy, might not be an exception to interest group politics, but its actual influence has hardly been tested. We use the US Input-Output Accounts to experimentally overcome the two main empirical obstacles for its verification--the "proxy problem" and the "Olson problem," as comprehensively identified by Broz and Frieden a few years ago. Focusing especially on the yen-dollar real exchange rate in the 1980s, we discover that it was influenced by commodity-based (rather than industry-based) exporters'/importers' groups within the US. Their pressures turn out to have worked with a quarter-lag, and in an asymmetric way, i.e., only during downturns of exports or imports. Given the deeper empirical verification that the pressures intensified especially during the first half of the 1980s, we claim that the interest group pressure provides an additionally critical explanation for portraying the "puzzling movement of the US dollar" over the period, enabling us to reconfirm the "competing nature in pressures" just as Becker portrayed in his theory of interest group pressures. The recent US economic situation seems to have much in common with those days. J. Japanese Int. Economies 22 (3) (2008) 364-382.
Volume (Year): 22 (2008)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/622903|
References listed on IDEAS
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.:
- Huizinga, Harry, 1997.
"Real exchange rate misalignment and redistribution,"
European Economic Review,
Elsevier, vol. 41(2), pages 259-277, February.
- Huizinga, H.P., 1997. "Real exchange rate misalignment and redistribution," Other publications TiSEM b6eeddf2-33ae-4e5e-ab1d-8, Tilburg University, School of Economics and Management.
- Huizinga, H., 1994. "Real Exchange Rate Misalignment and Redistribution," Papers 9490, Tilburg - Center for Economic Research.
- Huizinga, H.P., 1994. "Real exchange rate misalignment and redistribution," Discussion Paper 1994-90, Tilburg University, Center for Economic Research.
- Blomberg, S. Brock & Hess, Gregory D., 2003.
"Is the political business cycle for real?,"
Journal of Public Economics,
Elsevier, vol. 87(5-6), pages 1091-1121, May.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Jose Manuel Campa & Linda S. Goldberg, 1997. "The evolving external orientation of manufacturing: a profile of four countries," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 53-81.
- Jeffrey A. Frankel., 1987.
"International Capital Flows and Domestic Economic Policies,"
Economics Working Papers
8739, University of California at Berkeley.
- Jeffrey A. Frankel & Saburo Okita & Peter G. Peterson & James R. Schlesinger, 1988. "International Capital Flows and Domestic Economic Policies," NBER Chapters, in: The United States in the World Economy, pages 559-658 National Bureau of Economic Research, Inc.
- Jeffrey A. Frankel, 1987. "International Capital Flows and Domestic Economic Policies," NBER Working Papers 2210, National Bureau of Economic Research, Inc.
- Frankel, Jeffrey A., 1987. "international Capital Flows and Domestic Economic Policies," Department of Economics, Working Paper Series qt1q85b9j6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Caporale, Tony & Grier, Kevin B, 1998. "A Political Model of Monetary Policy with Application to the Real Fed Funds Rate," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 409-28, October.
- 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.
- Bearce, David H., 2003. "Societal Preferences, Partisan Agents, and Monetary Policy Outcomes," International Organization, Cambridge University Press, vol. 57(02), pages 373-410, March.
- Evans, Paul, 1986. "Is the dollar high because of large budget deficits?," Journal of Monetary Economics, Elsevier, vol. 18(3), pages 227-249, November.
- Ronald Macdonald & Mark P. Taylor, 1992.
"Exchange Rate Economics: A Survey,"
IMF Staff Papers,
Palgrave Macmillan, vol. 39(1), pages 1-57, March.
- Meese, Richard A & Rogoff, Kenneth, 1988.
" Was It Real? The Exchange Rate-Interest Differential Relation over the Modern Floating-Rate Period,"
Journal of Finance,
American Finance Association, vol. 43(4), pages 933-48, September.
- Meese, R. & Rogoff, K., 1988. "Was It Real? The Exchange Rate-Interest Differential Ralation Over The Modern Floating-Rate Period," Working papers 368, Wisconsin Madison - Social Systems.
- C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15, January.
- Paul R. Krugman, 1985.
"Is the Strong Dollar Sustainable?,"
NBER Working Papers
1644, National Bureau of Economic Research, Inc.
- Paul R. Krugman, 1985. "Is the strong dollar sustainable?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 103-155.
- Martin S. Feldstein, 1986.
"The Budget Deficit and the Dollar,"
in: NBER Macroeconomics Annual 1986, Volume 1, pages 355-409
National Bureau of Economic Research, Inc.
- Frieden, Jeffry A., 1991. "Invested interests: the politics of national economic policies in a world of global finance," International Organization, Cambridge University Press, vol. 45(04), pages 425-451, September.
- Scheve, Kenneth, 2004. "Public Inflation Aversion and the Political Economy of Macroeconomic Policymaking," International Organization, Cambridge University Press, vol. 58(01), pages 1-34, February.
- Frankel, Jeffrey A & Froot, Kenneth A, 1990. "Chartists, Fundamentalists, and Trading in the Foreign Exchange Market," American Economic Review, American Economic Association, vol. 80(2), pages 181-85, May.
- Dornbusch, Rudiger, 1987.
"Exchange Rate Economics: 1986,"
Royal Economic Society, vol. 97(385), pages 1-18, March.
- Stallings, David A, 1993. "Increased Protection in the 1980s: Exchange Rates and Institutions," Public Choice, Springer, vol. 77(3), pages 493-521, November.
- Stefan Krause & Fabio Méndez, 2005.
"Policy Makers' Preferences, Party Ideology, and the Political Business Cycle,"
Southern Economic Journal,
Southern Economic Association, vol. 71(4), pages 752-767, April.
- Stefan Krause & Fabio Mendez, 2003. "Policy Makers' Preferences, Party Ideology, and the Political Business Cycle," Emory Economics 0319, Department of Economics, Emory University (Atlanta).
- Wu, Jyh-Lin, 1999. "A re-examination of the exchange rate-interest differential relationship: evidence from Germany and Japan," Journal of International Money and Finance, Elsevier, vol. 18(2), pages 319-336, February.
- Chow, Gregory C & Lin, An-loh, 1971.
"Best Linear Unbiased Interpolation, Distribution, and Extrapolation of Time Series by Related Series,"
The Review of Economics and Statistics,
MIT Press, vol. 53(4), pages 372-75, November.
- Tom Doan, . "DISAGGREGATE: RATS procedure to implement general disaggregation (interpolation/distribution) procedure," Statistical Software Components RTS00050, Boston College Department of Economics.
- Tom Doan, . "CHOWLIN: RATS procedure to distribute a series to a higher frequency using related series," Statistical Software Components RTS00036, Boston College Department of Economics.
- Garrett, Geoffrey & Lange, Peter, 1995. "Internationalization, institutions, and political change," International Organization, Cambridge University Press, vol. 49(04), pages 627-655, September.
- Fabella, Raul V., 1996. "The debt-adjusted real exchange rate," Journal of International Money and Finance, Elsevier, vol. 15(3), pages 475-484, June.
- Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
- Sylviane GUILLAUMONT JEANNENEY & Ping HUA, 1999.
"How Does Real Exchange Rate Influence Income Inequality Between Urban And Rural Areas In China?,"
- Guillaumont Jeanneney, S. & Hua, P., 2001. "How does real exchange rate influence income inequality between urban and rural areas in China?," Journal of Development Economics, Elsevier, vol. 64(2), pages 529-545, April.
- Potters, Jan & Sloof, Randolph, 1996.
"Interest groups: A survey of empirical models that try to assess their influence,"
European Journal of Political Economy,
Elsevier, vol. 12(3), pages 403-442, November.
- Potters, J.J.M. & Sloof, R., 1996. "Interest groups : A survey of empirical models that try to assess their influence," Other publications TiSEM ff27d5d8-f584-4386-a1fc-5, Tilburg University, School of Economics and Management.
- Oberholzer-Gee, Felix & Waldfogel, Joel, 2005. "Strength in Numbers: Group Size and Political Mobilization," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 73-91, April.
- Kim, Iljoong & Kim, Inbae, 2007. "Endogenous selection of monetary institutions: With the case of discount windows and bureaucratic discretion," International Review of Law and Economics, Elsevier, vol. 27(3), pages 330-350, September.
When requesting a correction, please mention this item's handle: RePEc:eee:jjieco:v:22:y:2008:i:3:p:364-382. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.