Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration

By J. Frieden. International Organization, 2002

179 citations recorded by the source corpus.

In the thirty years before Economic and Monetary Union was achieved, European currency policies varied widely among countries and over time. In this article, I argue that the sectoral impact of regional exchange-rate arrangements, in particular their expected real effects on European trade and investment, exerted a powerful influence on the course of European monetary integration. The principal benefit of fixing European exchange rates was facilitation of cross-border trade and investment within the European Union (EU); the principal cost of fixed rates was the loss of national governments' ability to use currency policy to improve their producers' competitive position. Empirical results indeed indicate that a stronger and more stable currency was associated with greater importance of manufactured exports to the EU's hard-currency core, while depreciations were associated with an increase in the net import competition faced by the country's producers. This suggests a powerful impact of real factors related to trade and investment, and of private interests concerned about these factors, in determining national currency policies.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/24d5941c3de9cc6f01afc0c094d6e755c9066422

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Citations in the corpus

Globalization and the welfare state: a retrospective (2004, unknown): “Exchange rate stability, by reducing the currency risk, increases integration (Frieden 2002: 839).”
The Political Economy of Monetary Institutions (2002, unknown): “Frieden 1991.”
The Reductionist Gamble: Open Economy Politics in the Global Economy (2011, background): “The final example focuses on exchange rate regime choice+ OEP models of exchange rate politics posit that the choice between fixed and floating exchange rate regimes is a function of domestic political institutions+ Some research hypothesizes that the choice of exchange rate regime reflects the inte”
The Foreign Policy Consequences of Trade: China’s Commercial Relations with Africa and Latin America, 1992–2006 (2013, background): “In contrast, a state that exports large volumes of goods to a particular country and whose economy is relatively dependent on those goods might have incentives to maintain that trade relationship by avoiding political conflict with its partner (Frieden 2002; Gourevitch 1977; Kindleberger 1951).”
The Political Economy of the Euro Crisis (2016, background): “…(Hallerberg, 2002; Keefer & Stasavage, 2002), legislative and electoral institutions (Bernhard & Leblang, 1999) and the influence of special interests (Frieden, 2002; Steinberg, 2015; Walter, 2008) all affect the degree to which foregoing monetary policy autonomy is costly to political leaders.”