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

Author/Editor:

Yan M Sun

Publication Date:

December 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Series:

Working Paper No. 2002/212

Subject:

Conventional peg Exchange rate arrangements Exchange rate flexibility Expenditure Foreign exchange Inflation Prices

English

Publication Date:

December 1, 2002

ISBN/ISSN:

9781451874907/1018-5941

Stock No:

WPIEA2122002

Pages:

19

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