The exchange rate is the most important price in any economy, since it affects all other prices. Exchange rates are set, either directly or indirectly, by government policy. Exchange rates are also central to the global economy, for they profoundly influence all international economic activity. Despite the critical role of exchange rate policy, there are few definitive explanations of why governments choose the currency policies they do. Filled with in-depth cases and examples, Currency Politics presents a comprehensive analysis of the politics surrounding exchange rates.
Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, Jeffry Frieden shows how each industry’s characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. Frieden evaluates the accuracy of his theoretical arguments in a variety of historical and geographical settings: he looks at the politics of the gold standard, particularly in the United States, and he examines the political economy of European monetary integration. He also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil.
With an ambitious mix of narrative and statistical investigation, Currency Politics clarifies the political and economic determinants of exchange rate policies.
Jeffry A. Frieden is professor of government at Harvard University. His books include Lost Decades: The Making of America’s Debt Crisis and the Long Recovery; World Politics: Interests, Interactions, Institutions; Global Capitalism: Its Fall and Rise in the Twentieth Century (all Norton); and Debt, Development, and Democracy: Modern Political Economy and Latin America, 1965–1985 (Princeton).
“This excellent book is for anyone who has ever wondered about the origins of the Eurozone, the causes of the currency crises, and the importance of the classical gold standard. Frieden combines lively historical narratives with statistical analyses to show that currency politics are pretty much the same across time and space. No other author could bring out the common threads running through the book’s cases so clearly.” —J. Lawrence Broz, University of San Diego
“Currency Politics is an ambitious book on an important topic. Frieden is one of the best political economists and one of the best scholars writing on this subject.”—Sebastian Edwards, University of California, Los Angeles and author of Toxic Aid
“An authoritative treatment of the political economy of exchange rates by the leading international political economist specializing in this subject.”—Barry Eichengreen, University of California, Berkeley
Another Princeton book authored or coauthored by Jeffry A. Frieden: