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The Political Economics Side of the J-Curve

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  • António Caleiro

    () (Department of Economics, University of Évora)

Abstract

About twenty years ago, an article by van der Ploeg analysed the implications of the J-curve effect for the political business cycle in a small open economy [van der Ploeg (1989c)]. It was then shown that a sudden jump on the exchange rates in the election day should be observed if the government, in order to maximise its popularity, explores a J-curve effect. As a way of celebrating this work, that should have been more influential, it is presented in the paper a simulation study, which confirms that exchange rate overvaluation result a la van der Ploeg.

Suggested Citation

  • António Caleiro, 2008. "The Political Economics Side of the J-Curve," Economics Working Papers 02_2008, University of Évora, Department of Economics (Portugal).
  • Handle: RePEc:evo:wpecon:02_2008
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    File URL: http://hdl.handle.net/10174/8454
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    Keywords

    Exchange rates; J-Curve; Partisan Business Cycles; Political Business;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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