Political Economy of Exchange Rate Policy in Latin America: An Analytical Overview


In an initial attempt to fill the previous void in the economic literature, this paper summarizes a series of studies, undertaken as part of a larger project sponsored by the Inter–American Development Bank, on the role of political economy factors in the making of exchange rate policy. While these factors are, of course, examined in conjunction with economic and macroeconomic variables, they have previously received little attention in their own. These political economy factors most notably include the role of interest groups, electoral competition, and election timing. This paper presents some simple analytical arguments, then summarizes evidence contained in other papers in this project.