Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101491
Authors: 
Hefeker, Carsten
Year of Publication: 
1995
Series/Report no.: 
Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 277
Abstract: 
Evidence suggests there is a strong tendency among states to choose fixed exchange rates. Yet he interpretation of fixed exchange rates as a monetary policy rule remains unconvincing. Adopting an endogenous policy perspective, this paper argues that political-support maximizing governments choose fixed exchange rates to benefit domestic interest groups. Exogenous shocks, however, may change domestic political equilibria, causing the collapse of international arrangements and the switch to flexible exchange rates. Institutional pecularities make monetary unification a special case in this cycle.
Subjects: 
exchange rate regime
monetary union
political economy
JEL: 
D72
F02
F33
Document Type: 
Working Paper

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