Monetary divergence: domestic political institutions and the monetary autonomy-exchange rate stability trade off
By: Bearce, David H.
Material type:
ArticlePublisher: 2002Description: p.194-220.Subject(s): Exchange rates
In:
Comparative Political StudiesSummary: Under capital mobility, governments face a political choice: hold an autonomous monetary policy with currency instability or stabilize exchange rates with the sacrifice of policy autonomy. This article examines what domestic political factors led the advanced industrial democracies to choose an autonomous monetary policy and what factors led them instead to choose stable exchange rates in the post-Bretton Woods era. Leftist-led governments have opted for an autonomous loose fiscal-tight monetary policy mix associated with exchange rate instability. Rightist-led governments have chosen a tight fiscal-loose monetary policy mix associated with exchange rate stability. These results are important because they help reestablish partisan agency in terms of monetary - exchange rate policy making, even under the structural constraint of inter-national capital mobility. - Reproduced.
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | Volume no: 35, Issue no: 2 | Available | AR52785 |
Under capital mobility, governments face a political choice: hold an autonomous monetary policy with currency instability or stabilize exchange rates with the sacrifice of policy autonomy. This article examines what domestic political factors led the advanced industrial democracies to choose an autonomous monetary policy and what factors led them instead to choose stable exchange rates in the post-Bretton Woods era. Leftist-led governments have opted for an autonomous loose fiscal-tight monetary policy mix associated with exchange rate instability. Rightist-led governments have chosen a tight fiscal-loose monetary policy mix associated with exchange rate stability. These results are important because they help reestablish partisan agency in terms of monetary - exchange rate policy making, even under the structural constraint of inter-national capital mobility. - Reproduced.
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