Domestic political institutions and exchange rate commitments in the developing world.

Policymakers use a fixed exchange rate regime to signal their commitment to low inflation and to exchange rate stability. Increasing economic integration and the rise of democratic institutions make it more difficult for policymakers to maintain the credibility of this commitment. We use binary prob...

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Publicado en:International Studies Quarterly Vol. 43; no. 4; pp. 599 - 621
Autor principal: Leblang, David A.
Formato: Artículo
Publicado: Oxford University Press / USA Dec99
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Acceso en línea:Ver este registro en EBSCOhost
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        atl: Domestic political institutions and exchange rate commitments in the developing world.
      aug:
        au: Leblang, David A.
      su:
        Foreign exchange rates
        Economic conditions in developing countries
        Monetary policy
        Developing countries
      sug:
        subj:
          Foreign exchange rates
          Economic conditions in developing countries
          Monetary policy
          Developing countries
      ab: Policymakers use a fixed exchange rate regime to signal their commitment to low inflation and to exchange rate stability. Increasing economic integration and the rise of democratic institutions make it more difficult for policymakers to maintain the credibility of this commitment. We use binary probit (with a variety of corrections for autocorrelated and heteroscedastic disturbances) to test hypotheses relating democratic institutions to exchange rate regime choice on a sample of 76 developing countries over the period 1973-1994. The empirical analysis indicates that domestic political preferences--as measured by the structure of domestic political institutions and the fractionalization of the party system--influence exchange rate regime choice. We find that floating exchange rate regimes are more likely in democratic than in nondemocratic polities and that democratic polities with majoritarian electoral systems are more likely to fix their exchange rates than those with systems of proportional representation.
      pubtype: Academic Journal
      doctype: Article
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    language: English
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