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A Theory of Currency Policy Preferences

A Theory of Currency Policy Preferences

Chapter:
(p.19) Chapter 1 A Theory of Currency Policy Preferences
Source:
Currency Politics
Author(s):
Jeffry A. Frieden
Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691173849.003.0001

This chapter sets forth a theoretical framework for the analysis of the politics of exchange rates. It relies on three factors—international exposure, tradability, and pass-through—to explain as much of currency policy preferences as possible. This can provide building blocks for a broader analysis of the politics of exchange rates. The chapter begins with a statement of the dependent variables of the study. It then presents the author's reasoning and the empirical expectations that flow from it. This is followed by a brief summary of other scholarly studies of the economics and politics of exchange rates in order to situate this study within the broader literature.

Keywords:   currency policy, international exposure, tradability, pass-through, exchange rate policy

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