Latin American Currency Policy, 1970–2010
Latin American Currency Policy, 1970–2010
This chapter gives an overview of Latin American currency policy since the collapse of the Bretton Woods monetary order in the early 1970s and provides a statistical analysis of exchange rate choices. It starts with a reminder of the author's analytic expectations, especially as relevant to Latin America, and then goes on to give a historical background to the region's experience and provide a narrative analysis of regional currency policy developments, emphasizing special interest and electoral factors. First, it evaluates the impact of the sort of special interest pressures examined in the US and European cases. It presents evidence that reinforces the idea that internationally oriented economic actors favor a more stable currency. The second set of political factors is related to elections. The evidence seems clear that governments do indeed encourage or allow the currency to appreciate in the run-up to an election, and similarly delay going off a currency peg during that period.
Keywords: Latin America, currency policy, exchange rate policy, elections, special interests
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