1、CURRENCY POLITICSCURRENCY POLITICS The Political Economy of Exchange Rate Policy Jeffry A. Frieden Princeton University Press Princeton and OxfordCopyright 2015 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom
2、: Princeton University Press, 6 Oxford Street, Woodstock, Oxfordshire OX20 1TW press.princeton.edu Jacket art: Copyright Maxx-Studio/Shutterstock. All Rights Reserved Library of Congress Cataloging-in-Publication Data Frieden, Jeffry A. Currency politics : the political economy of exchange rate poli
3、cy / Jeffry A. Frieden. pages cm Includes bibliographical references and index. ISBN 978-0-691-16415-1 (hardcover : alk. paper) 1. Foreign exchange ratesHistory. 2. Commercial policyHistory. I. Title. HG3811.F75 2015 332.456dc23 2014028533 British Library Cataloging- in- Publication Data is availabl
4、e This book has been composed in Adobe Caslon Pro Printed on acid- free paper. Printed in the United States of America 10 9 8 7 6 5 4 3 2 1CONTENTS Preface vii Acknowledgments xi Introduction The Political Economy of Currency Choice 1 Chapter 1 A Theory of Currency Policy Preferences 19 Chapter 2 Th
5、e United States: From Greenbacks to Gold, 1862 79 49 Chapter 3 The United States: Silver Threats among the Gold, 1880 96 104 Chapter 4 European Monetary Integration: From Bretton Woods to the Euro and Beyond 137 Chapter 5 Latin American Currency Policy, 1970 2010 186 Chapter 6 The Political Economy
6、of Latin American Currency Crises 220 Chapter 7 The Politics of Exchange Rates: Implications and Extensions 246 Conclusions 264 References 267 Index 283PREFACE C urrencies and their values are central to the world economy. They affect international trade, investment, finance, migration, and travel.
7、The prevailing exchange rate system often defines the international economic order. The gold standard, a global regime of fixed currencies that prevailed for over forty years before 1914, was so pivotal that the period is often known as the classical gold standard era. 1After World War I, major gove
8、rnments were unable to adapt the currency order to the changed conditions, and failed exchange rate policies were a major reason why the interwar world economy tottered and eventually collapsed. 2 In the aftermath of World War II, the Western world organized its economy around the Bretton Woods mone
9、tary order of fixed but ad- justable exchange rates, with general success. 3Since the collapse of the Bretton Woods currency system, exchange rate policies have, if any- thing, gained in importance. In todays era of “globalization,” exchange rate policies have played a major role in virtually all ec
10、onomies. The European Union has for decades attempted to stabilize the currencies of its member states, eventually leading to the 1999 creation of a single European currency the euro. Although the eurozone has experienced massive difficulties, the single European currency remains a cornerstone of th
11、e most ambi- tious attempt at international economic integration in modern history. 1 Estevadeordal, Franz, and Taylor 2003. 2 Eichengreen 1992; Bernanke and James 1991. 3 See, for example, many of the essays in Bordo and Eichengreen 1993.viii Preface Elsewhere in the rich world, currency policies a
12、nd movements have been a focus of political controversy both within and between nations. Developing countries, too, have faced crucial decisions about their exchange rates. Some have linked their currencies tightly to the dollar, the euro, or other leading currencies, while others have decided to le
13、t their currencies float freely. Still others have made managing their cur- rencies central to their economic strategies. These decisions have pow- erfully affected subsequent economic developments. Many countries in East Asia, in particular China, would ascribe their extraordinary eco- nomic succes
14、s at least in part to systematic policies to keep their cur- rencies relatively weak in order to stimulate export- led economic growth. On the other hand, currency crises have become commonplace elsewhere in the developing world, such as Mexico in 1994, Asia in 1997 98, Russia in 1998, Brazil in 199
15、9, and Argentina and Turkey in 2001. Many of these currency crises led to major economic, social, and political upheavals. And currency policies have joined or even sup- planted trade policies as a major source of friction among governments in todays globalized economy. National and international cu
16、rrency relations are central features of the world economy, and they are largely the result of government ex- change rate policies. We cannot analyze the international trading sys- tem without understanding national trade policies; likewise, we cannot analyze the international monetary system withou
17、t understanding na- tional currency policies. This has led scholars to attempt to explain gov- ernment policies toward their exchange rates. Such efforts of necessity take into account both economic and political factors in the making of currency policy. My own interest in the political economy of e
18、xchange rate policy dates back over twenty years. My research has emphasized how the distributional effects of currency policies help explain why interest groups would support or oppose particular currency measures. Almost all economic policies create winners and losers, and currency policy is no ex
19、ception. My early work proposed simple divisions among socio- economic actors, and applied them to a variety of settings. 4While there are many other factors that go into the making of currency policy, from domestic and international macroeconomic conditions to political in- stitutions, I continue t
20、o believe that the preferences of crucial social 4 See, for example, Frieden 1991, 1994a.ix Preface groups are an essential building block of any rounded explanation of government policy, in the monetary realm as elsewhere. Currency Politics: The Political Economy of Exchange Rate Policy ex- pands b
21、oth the theoretical and empirical reach of my scholarship on the subject. The theoretical principles presented here go beyond my early ideas. I have been especially interested in incorporating further considerations of how exchange rates affect economic agents a con- cern reflected largely in attent
22、ion to p ass- thr ough: the extent to which currency movements are transmitted to the domestic economy by way of relative price movements. In addition, I have attempted to expand the nuance and accuracy of the socioeconomic divisions we would ex- pect to find: exporters differ among themselves, as d
23、o those with com- mercial and financial interests. Other scholars have written elegantly on similar topics, and I strive to incorporate their advances in my theo- retical and empirical discussions. Theoretically, this study focuses on identifying and clarifying the distributionally motivated currenc
24、y policy preferences of economic actors firms, industries, and groups. It argues that characteristics of an industry, including its exposure to exchange rate risk and the relative price effects of exchange rate movements, determine its exchange rate policy preferences. There are two relevant dimensi
25、ons of exchange rate policy choice: the regime (fixed or floating) and level (appreciated or depreciated). With regard to the former, I contend that actors that rely heavily on international trade, investment, or financial ties will, all else being equal, prefer a stable exchange rate the gold stand
26、ard, fixed rates, dol- larization, and euroization. With regard to the latter, I assert that trad- ables producers will, all else being equal, prefer a depreciated exchange rate. (The opposite applies: domestically oriented actors prefer a flexible rate and nontradables producers prefer an appreciat
27、ed one.) These con- cerns are strongly influenced by the degree to which exchange rate movements are passed through to domestic prices, which in turn is a function of complex features of modern industries. Where pass- through is limited the impact of currency movements on prices is small concerns ab
28、out exchange rate volatility rise and support for a depreci- ated currency declines. Empirically, I carry out a range of studies to highlight the potential applicability of my approach across time and space. The first part of the book looks at the US experience with the gold standard in the nine-x P
29、reface teenth century a period in which monetary politics were hotly con- tested within the United States, as in many other countries. The second part switches gears to explore a much more recent experience with de- bates over a fixed exchange rate (and beyond) among open economies the process of Eu
30、ropean monetary integration leading toward the adoption of the euro. In the third section, I focus on the currency expe- riences of Latin America, which vary both in how open the economies of the region have been to the rest of the world and in the multiplicity of exchange rate policies adopted by t
31、he regions governments. We have a long way to go before we have a full understanding of the determinants of national policies toward the exchange rate. We have even further to go before we understand how national decisions interact to create regional and international monetary orders. A wide variety
32、 of economic, political, historical, and other factors come to- gether to affect these policies and outcomes. My hope is that the re- search presented here will shed light on how socioeconomic interests, whether of concentrated groups or broad segments of the population, help shape currency politics
33、 and currency policy.ACKNOWLEDGMENTS O ver the years, I have learned from dozens and dozens of fellow scholars, and it would be futile to try to name them all. For this specific manuscript, I am particularly grateful to Lawrence Broz, Jesse Schreger, David Singer, and three anonymous reviewers, who
34、read the entire manuscript and gave excellent comments and sug- gestions on it. I owe an especially great debt to the many outstanding research assistants who have helped me over the years. I am particularly grateful to Albert Wang, who endured my foibles longest and most patiently. My other excelle
35、nt research assistants have been Cynthia Balloch, Jas- mina Beganovic, Ashley DiSilvestro, Andrew Eggers, Kyle Jaros, An- juli Kannan, Rohan Kekre, Rebecca Nelson, Alex Noonan, and Andrea Woloski. I am grateful to them all, and heartened that despite having undergone the drudgery of working on my pr
36、oject, many of them have gone on to successful careers in academia. For permission to reprint, I would like to thank the Journal of Eco- nomic History for parts of chapter 3, and International Organization for parts of chapter 4. All data used in this study, along with explanations of their sources,
37、 can be accessed via http:/press.princeton.edu/titles/10364.html.CURRENCY POLITICSIntroduction The Political Economy of Currency Choice T he exchange rate is the most important price in any economy, for it affects all other prices. The exchange rate is itself set or strongly influenced by government
38、 policy. Currency policy therefore may be a governments single most significant economic pol- icy. This is especially the case in an open economy, in which the rela- tionship between the national and international economies is crucial to virtually all other economic conditions. Policymakers who have
39、 to answer, directly or indirectly, to constit- uents, such as voters, interest groups, and investors, are the ones who make currency policy. Like all policies, the choices available to currency policymakers involve trade- offs. Currency policies have both benefits and costs, and create both winners
40、 and losers. Those who make ex- change rate policies must evaluate the trade- offs, weigh the costs and benefits, and consider the winners and losers of their actions. Exchange rate policy provides an extraordinary window on a na- tions political economy. This is particularly true in countries whose
41、 economies are open to the rest of the world economy, because in such a situation currency policy has a profound impact on a whole range of 2 Introduction economic activities and political decisions. Debates over exchange rate policy, and the eventual decisions made about it, tell us a remarkable am
42、ount about an economy, a society, and its political institutions. Currency politics reflect the importance of the mass- consuming public, role of elections, organization of economic groups, power of particularistic interests, time horizons of voters and politicians, and re- sponsiveness of political
43、 institutions to pressures along with virtually all other features of a national political economy. In some ways, exchange rate policy requires a government to make a relatively simple decision: to fix the currency or allow it to float, to try to keep the currency strong or weak. But these simple de
44、cisions reflect extraordinarily complex structures, motives, and pressures. Currency politics summarize many features of a national political economy, for those who make currency policy must take into account the impact of their decisions on almost everyone in society. Currency Choices Currency poli
45、cymakers face two interrelated choices. The first is the desired exchange rate regime, and especially whether to fix the exchange rate against either some other nations currency or a commodity such as gold. The second is the level (price) of the exchange rate. 1 The exchange rate regime has two comm
46、on meanings. The first refers to the prevailing international monetary arrangements. The gold standard, Bretton Woods gold- dollar standard, and contemporary float- ing are international monetary regimes; the European Monetary Sys- tem (EMS) was a regional monetary regime. In this sense, regime choi
47、ce involves joint decisions by several countries. No one nation can single- handedly create an international monetary regime, given that such a system exists only to the extent that more than one nation ad- heres to it. The second meaning of the exchange rate regime is simply the method by which an
48、individual government manages its currency. In this context, a nation can choose a variety of ways to organize its own 1The economics literature on exchange rates is enormous. For a recent survey of the state of the art, see Engel 2014. For two excellent surveys of previous generations of the litera
49、ture, see Isard 1995; Sarno and Taylor 2002.3 The Political Economy of Currency Choice exchange rate in relation to those of other currencies. A fixed exchange rate regime commits the monetary authorities to maintain the value of the national currency against a commodity such as gold or another national currency. Sometimes a currency is fixed against a basket of cur- rencies, but this is less purely fixed as it implies substantial variability in exchange rates relative to individual currencies. In addition, if (as is common) the composition of the basket is not an
