A Political-Economic Model of the Choice of Exchange Rate Regime

Volume/Issue: Volume 2002 Issue 212
Publication date: December 2002
ISBN: 9781451874907
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Inflation , Public Finance , WP , exchange rate , exchange rate regimes , political economy , budget constraint , regime choice , exchange regime , incumbent government , incumbent's regime policy , choice of a government , Exchange rate arrangements , Exchange rate flexibility , Inflation , Conventional peg

Summary

Facing electoral uncertainty, a government chooses its exchange regime in a trade-off among three incentives: (i) tying the hands of its opponent should it lose the election; (ii) facilitating its own future policy implementation should it win the election; and (iii) increasing its chance of reelection.