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Can Domestic Institutions Explain Exchange Rate Regime Choice? The Political Economy of Monetary Institutions Reconsidered

Author

Listed:
  • Beth Simmons

    (Harvard University)

  • Jens Hainmueller

    (Harvard University)

Abstract

Recent articles in International Organization and elsewhere have explored the role of domestic institutions in shaping exchange rate regime choice. These articles use some variation on the information reported by governments to the International Monetary Fund as their dependent variable. Even more recently, new data have become available that reflect actual (de facto) rather than declaratory (de jure) policies with respect to exchange rate regimes. The findings of the domestic institutionalists are significantly weakened, and in some cases reversed, when this more appropriate measure is used to test their claims. These tests cast doubt on whether a domestic institutional focus is the most fruitful way to study exchange rate regimes.

Suggested Citation

  • Beth Simmons & Jens Hainmueller, 2005. "Can Domestic Institutions Explain Exchange Rate Regime Choice? The Political Economy of Monetary Institutions Reconsidered," International Finance 0505011, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpif:0505011
    Note: Type of Document - pdf; pages: 37
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    References listed on IDEAS

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    Cited by:

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    2. Kuokštis, Vytautas & Asali, Muhammad & Spurga, Simonas Algirdas, 2022. "Labor market flexibility and exchange rate regimes," European Journal of Political Economy, Elsevier, vol. 75(C).

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    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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