Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-30T21:32:02.424Z Has data issue: false hasContentIssue false
  • English
  • Français

Divested Interests: Globalization and the New Politics of Exchange Rates

Published online by Cambridge University Press:  20 January 2017

Sarah Cleeland Knight
Sarah Cleeland Knight*
Affiliation:
American University
Get access Rights & Permissions [Opens in a new window]

Abstract

The globalization of production and finance is responsible for much of the variation in political contestation over exchange rates since the end of Bretton Woods. On the one hand, globalization increases the salience of the policy decisions that affect exchange rates, as more firms and their workers engage more in international trade and compete more against imports. On the other hand, globalization offers firms a myriad of opportunities to manage their exchange rate risk, through operational and financial hedging. But hedging is available to only certain types of economic actors and in certain situations of exchange rate risk. In this way, globalization has redrawn traditional political cleavages on exchange rates. This argument is tested with an original survey of US firms, labor unions, and trade associations on their preferences and political activity on exchange rate policy.

Keywords

globalizationexchange ratesinterest groupslobbying
Type
Research Article
Information
Business and Politics , Volume 12 , Issue 2 , August 2010 , pp. 1 - 28
Copyright
Copyright © V.K. Aggarwal 2010 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Allayannis, George, Ihrig, Jane, Weston, and James P. 2001. “Exchange-Rate Hedging: Financial versus Operational Strategies.” The American Economic Review 91 (2): 391–395.CrossRefGoogle Scholar
Bank for International Settlements. 2010. “Semiannual OTC Derivatives Statistics at End-December 2009.” Available at http://www.bis.org/statistics/derstats.htm (accessed 26 May 2010).Google Scholar
Bailey, Michael. 2001. “Quiet Influence: The Representation of Diffuse Interests on Trade Policy, 1983-94.” Legislative Studies Quarterly, Vol. 26 (February): pp. 45–80.CrossRefGoogle Scholar
Bartram, Sohnke M. 2008. “What Lies Beneath: Foreign Exchange Rate Exposure, Hedging and Cash Flows.” Journal of Banking & Finance 32 (8): 1508–1521.CrossRefGoogle Scholar
Baumgartner, Frank R., and Leech, Beth. 1998. Basic Interests: The Importance of Groups in Politics and in Political Science. Princeton: Princeton University Press.Google Scholar
Broz, J. Lawrence, Frieden, Jeffry, and Weymouth, Stephen. 2008. “Exchange Rate Policy Attitudes: Direct Evidence from Survey Data.” IMF Staff Papers, 17 June 2008.Google Scholar
Chisholm, Andrew M. 2004. Derivatives Demystified: A Step-by-Step Guide to Forwards, Futures, Swaps, and Options. West Sussex, England: John Wiley and Sons.Google Scholar
Choi, Jongmoo Jay, and Jiang, Cao. 2009. “Does Multinationality Matter? Implications of Operational Hedging for the Exchange Rate Risk Exposure.” Journal of Banking & Finance 33 (11): 1973–1982.CrossRefGoogle Scholar
Cobb, Roger W., and Elder, Charles D. 1983 [1972]. Participation in American Politics: The Dynamics of Agenda-Building, 2nd edition. Baltimore: Johns Hopkins University Press.Google Scholar
Cohen, Benjamin. 2004. The Future of Money. Princeton: Princeton University Press.Google Scholar
The Conference Board. 2004. Global Exchange Rates: Do They Affect Investment? New York: Conference Board.Google Scholar
Destler, I.M. 2005. American Trade Politics, 4th edition. Washington, DC: Institute for International Economics.Google Scholar
Destler, I.M., and Randall Henning, C. 1989. Dollar Politics: Exchange Rate Policymaking in the United States. Washington, DC: Institute for International Economics.Google Scholar
Duckenfield, Mark, and Aspinwall, Mark. 2007. “Private Interests and Exchange Rate Politics: The Case of British Business.” Paper presented at the Annual Conference of the International Studies Association, 28 February − 4 March.Google Scholar
Frieden, Jeffry A. 2002. “Real Sources of European Currency Policy: Sectoral Interests and European Monetary Integration.” International Organization 56 (4): 831–860.CrossRefGoogle Scholar
Frieden, Jeffry A. 1997. “Monetary Populism in Nineteenth-Century America: An Open Economy Interpretation.” The Journal of Economic History 57 (2): 367–395.CrossRefGoogle Scholar
Frieden, Jeffry A. 1994. “Exchange Rate Politics: Contemporary Lessons From American History.” Review of International Political Economy 1 (1): 81–103.CrossRefGoogle Scholar
Frieden, Jeffry A. 1991. “Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45 (4): 425–451.CrossRefGoogle Scholar
Funabashi, Yoichi. 1988. Managing the Dollar: From the Plaza to the Louvre. Washington, DC: Institute for International Economics.Google Scholar
Garrett, Geoffrey. 1988. “Global Markets and National Politics: Collision Course or Virtuous Cycle?” International Organization 52: 737–774.Google Scholar
Goldberg, Linda S. and Tille, Cedric. 2006. “The International Role of the Dollar and Trade Balance Adjustment.” NBER Working Paper No. W12495 (August).CrossRefGoogle Scholar
Goldstein, Morris, and Lardy, Nicholas R. 2009. Debating China's Exchange Rate Policy. Washington, DC: Peterson Institute for International Economics.Google Scholar
Gowa, Joanne. 1988. “Public Goods and Political Institutions: Trade and Monetary Policy Processes in the United States.” International Organization 42 (1): 15–32.CrossRefGoogle Scholar
Gowa, Joanne. 1983. Closing the Gold Window: Domestic Politics and the End of Bretton Woods. Ithaca: Cornell University Press.Google Scholar
Grossman, Gene M., and Helpman, Elhanan. 2002. Interest Groups and Trade Policy. Princeton: Princeton University Press.CrossRefGoogle Scholar
Hiscox, Michael J. 2002. International Trade and Political Conflict: Commerce, Coalitions, and Capital Mobility. Princeton: Princeton University Press.CrossRefGoogle Scholar
Ikenberry, G. John. 1993. “The Political Origins of Bretton Woods.” In A Retrospective on the Bretton Woods System, edited by Bordo, Michael D. and Eichengreen, Barry. Chicago: University of Chicago Press.Google Scholar
Kenyon, Alfred. 1981. Currency Risk Management. New York: John Wiley & Sons.Google Scholar
Kinderman, Daniel. 2008. “The Political Economy of Sectoral Exchange Rate Preferences: Germany From 1960-2008 and Beyond.” Review of International Political Economy 15 (5): 851–880.CrossRefGoogle Scholar
Krasner, Stephen D. 1978. “United States Commercial and Monetary Policy: Unraveling the Paradox of External Strength and Internal Weakness.” In Between Power and Plenty, edited by Katzenstein, Peter J. Madison: University of Wisconsin Press.Google Scholar
Lowi, Theodore J. 1979 [1969]. The End of Liberalism: The Second Republic of the United States, 2nd edition. New York: W. W. Norton & Company.Google Scholar
McNamara, Kathleen R. 1998. The Currency of Ideas: Monetary Politics in the European Union. Ithaca: Cornell University Press.Google Scholar
Melamed, Leo. 1996. Escape to the Futures. New York: John Wiley & Sons.Google Scholar
Milner, Helen. 1995. “Resisting the Protectionist Temptation: Industry and the Making of Trade Policy in France and the United States during the 1970s.” In International Political Economy: Perspectives on Global Wealth and Power, 3rd edition, edited by Frieden, Jeffry A. and Lake, David A. New York: St. Martin's Press.Google Scholar
Odell, John S. 1982. US International Monetary Policy: Markets, Power, and Ideas as Sources of Change. Princeton: Princeton University Press.CrossRefGoogle Scholar
Rogowski, Ronald. 1989. Commerce and Coalitions: How Trade Affects Domestic Political Alignments. Princeton, NJ: Princeton University Press.Google Scholar
Schattschneider, E. E. 1960. The Semisovereign People: A Realist's View of Democracy in America. Hinsdale, Illinois: Dryden Press.Google Scholar
Schattschneider, E. E. 1935. Politics, Pressures, and the Tariff. New York: Prentice Hall.Google Scholar
Shambaugh, George E. 2004. “The Power of Money: Global Capital and Policy Choices in Developing Countries.” American Journal of Political Science 48 (2): 281–295.CrossRefGoogle Scholar
Tang, Christopher and Tomlin, Brian. 2008. “How Much Flexibility Does It Take to Mitigate Supply Chain Risks?” In Supply Chain Risk, edited by Zsidisin, George A. and Ritchie, Bob. Springer Publishing.Google Scholar
Truman, David B. 1951. The Governmental Process. New York: Alfred A. Knopf.Google Scholar