Why are realignments postponed? A model of exchange rate revisions with opportunistic governments

Pierre-Guillaume Méon

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: In this paper we investigate the consequences of elections on the willingness of office-motivated governments to defend a pre-announced parity in the presence of output shocks in a fixed exchange rate regime with an escape clause. Knowing that voters rationally interpret realignments as a sign of incompetence, incumbents refrain from realigning before elections. They can do so either when they are competent or when shocks are small enough. Realignments are therefore more likely and output is less volatile on the morrow than on the eve of elections. The welfare impact of elections is ambiguous.

Date: 2004-06
Note: FLWIN
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published in: The Manchester School (2004) v.72 n° 3,p.298-316

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Why are realignments postponed? A model of exchange rate revisions with opportunistic governments (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulb:ulbeco:2013/8380

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... .ulb.ac.be:2013/8380

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().