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Domestic pressures and the exchange rate regime: why economically bad decisions are politically popular?

  • H.P. GRÃœNER

    (University of Konstanz)

  • C. HEFEKER

    (University of Konstanz)

Every currency crisis brings with it a discussion on the optimal choice of the exchange rate regime. This literature is characterised by an exclusive focus on this single policy issue whilst taking other institutional choices as given. The authors attempt to develop an approach which incorporates a simultaneous choice of three major institutional elements that are germane to this issue and which affect social welfare.

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File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10496/10383
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Article provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.

Volume (Year): 48 (1995)
Issue (Month): 194 ()
Pages: 331-350

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Handle: RePEc:psl:bnlqrr:1995:34
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  14. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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  19. Grilli, Vittorio, 1989. "Exchange rates and seigniorage," European Economic Review, Elsevier, vol. 33(2-3), pages 580-587, March.
  20. De Grauwe, Paul, 1993. "The Political Economy of Monetary Union in Europe," CEPR Discussion Papers 842, C.E.P.R. Discussion Papers.
  21. Vaubel, Roland, 1990. "Currency Competition and European Monetary Integration," Economic Journal, Royal Economic Society, vol. 100(402), pages 936-46, September.
  22. Gottfries, Nils & Horn, Henrik, 1987. "Wage Formation and the Persistence of Unemployment," Economic Journal, Royal Economic Society, vol. 97(388), pages 877-84, December.
  23. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  24. Barry Eichengreen & Jeffry Frieden, 1993. "The Political Economy Of European Monetary Unification: An Analytical Introduction," Economics and Politics, Wiley Blackwell, vol. 5(2), pages 85-104, 07.
  25. Bofinger, Peter, 1994. "Is Europe an Optimum Currency Area?," CEPR Discussion Papers 915, C.E.P.R. Discussion Papers.
  26. Hefeker, Carsten, 1995. "The political choice and collapse of fixed exchange rates," Discussion Papers, Series II 277, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
  27. Cohen, Daniel & Wyplosz, Charles, 1989. "The European Monetary Union: An Agnostic Evaluation," CEPR Discussion Papers 306, C.E.P.R. Discussion Papers.
  28. Paul De Grauwe, 1993. "The Political Economy of Monetary Union in Europe," The World Economy, Wiley Blackwell, vol. 16(6), pages 653-661, November.
  29. de Kock, Gabriel & Grilli, Vittorio, 1993. "Fiscal Policies and the Choice of Exchange Rate Regime," Economic Journal, Royal Economic Society, vol. 103(417), pages 347-58, March.
  30. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
  31. Alberto Giovannini, 1993. "Bretton Woods and Its Precursors: Rules versus Discretion in the History of International Monetary Regimes," NBER Chapters, in: A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, pages 109-154 National Bureau of Economic Research, Inc.
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