Hostname: page-component-745bb68f8f-f46jp Total loading time: 0 Render date: 2025-01-13T14:13:55.642Z Has data issue: false hasContentIssue false
  • English
  • Français

The Political Economy of Exchange-Rate Policy: U.S. and Japanese Intervention Policies, 1977–90

Published online by Cambridge University Press:  28 November 2008

Keisuke Iida
Keisuke Iida
Affiliation:
Politics, Princeton University
Get access Rights & Permissions [Opens in a new window]

Abstract

Since day-to-day implementation of exchange-rate policy has been neglected in the literature on international monetary relations, U.S. and Japanese intervention policies in the post-Bretton Woods period are analyzed. The determinants of Japanese intervention policy are clearly identified: international coordination and U.S. intervention increase the amount of Japanese intervention. A strong tendency to ‘lean against the wind’ and some indication of ‘beggar-thy-neighbour’ policy exist as well. On the other hand, U.S. intervention policy is more elusive. There is some evidence, however, that Japanese and German intervention as well as the Louvre Accord and Democratic administrations led to larger amounts of U.S. intervention. Some interpretations are offered as to why it is difficult to unravel U.S. policy.

Type
Articles
Information
Journal of Public Policy , Volume 13 , Issue 4 , October 1993 , pp. 327 - 349
Copyright
Copyright © Cambridge University Press 1993

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

REFERENCES

Alt, J. E. (1991) Leaning into the wind or ducking out of the storm?: U.S. monetary policy in the 1980s. In Alesina, A. and Carliner, G. (eds.), Politics and Economics in the Eighties. Chicago: University of Chicago Press.Google Scholar
Artus, J. R. (1976) Exchange rate stability and managed floating: the experience of the Federal Republic of Germany, IMF Staff Papers, 23, 312–333.CrossRefGoogle Scholar
Baldwin, R. (1988) Hysteresis in import prices: the beachhead effect, American Economic Review, 78, 773–85.Google Scholar
Beck, N. (1982) Presidential influence on the Federal Reserve in the 1970s, American Journal of Political Science, 26, 415–445.CrossRefGoogle Scholar
Beck, N. (1987) Elections and the Fed: is there a political monetary cycle?, American Journal of Political Science, 31, 194–216.Google Scholar
Bergsten, C. F. (1975) The Dilemmas of the Dollar: The Economics and Politics of United States International Monetary Polity. New York: New York University Press.Google Scholar
Block, F. L. (1977) The Origins of International Economic Disorder: A Study of United States International Monetary Polity from World War II to the Present. Berkeley, CA: University of California Press.Google Scholar
Branson, W. H. (1983) A model of exchange-rate determination with policy reaction: evidence from monthly data, NBER Working Paper 1135.CrossRefGoogle Scholar
Branson, W. H., Hulttunen, H. and Masson, P. (1977) Exchange rates in the short run: the dollar-Deutschemark rate, European Economic Review, 10, 303–324.CrossRefGoogle Scholar
Catte, P., Galli, G. and Rebecchini, S. (1992) Concerted interventions and the dollar: an analysis of daily data. Unpublished paper, Banca d'Italia.Google Scholar
Cohen, B. J. (1977) Organizing the World's Money: The Political Economy of International Monetary Relations. New York: Basic Books.CrossRefGoogle Scholar
Cohen, S. D. and Meltzer, R. I. (1982) United States International Economic Policy in Action: Diversity of Decision Making. New York: Praeger.Google Scholar
Coombs, C. A. (1976) The Arena of International Finance. New York: Wiley.Google Scholar
Cooper, R. N. (1987) The International Monetary System: Essays in World Economics. Cambridge, MA: MIT Press.Google Scholar
Destler, I. M. and Henning, C. R. (1989) Dollar Politics: Exchange Rate Policymaking in the United States. Washington, D.C.: Institute for International Economics.Google Scholar
Dominguez, K. M., and Frankel, J. A. (1993) Does Foreign Exchange Intervention Work? Washington, D.C.: Institute for International Economics.Google Scholar
Eichengreen, B. and Sachs, J. (1990) Exchange rates and economic recovery in the 1930s. In Eichengreen, B., Elusive Stability: Essays in the History of International Finance, 1919–1939. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Eijffinger, S. C. W. and Gruijters, N. P. D. (1991). On the short term objectives of daily intervention by the Deutsche Bundesbank and the Federal Reserve System in the U.S. dollar/Deutsche Mark exchange market, Kredit and Kapital, 24, 50—72.Google Scholar
Fair, R. C. (1970) The estimation of simultaneous equation models with lagged endogenous variables and first order serial correlated errors, Econometrica, 38, 507–516.CrossRefGoogle Scholar
Funabashi, Y. (1988) Managing the Dollar: From the Plaza to the Louvre. Washington, D.C.: Institute for International Economics.Google Scholar
Gowa, J. (1983) Closing the Gold Window: Domestic Politics and the End of Bretton Woods. Ithaca, NY: Cornell University Press.Google Scholar
Grier, K. (1989) On the existence of a political monetary cycle, American Journal of Political Science, 33. 376–89.CrossRefGoogle Scholar
Hirsch, F., Doyle, M. and Morse, E. L. (1977) Alternative to Monetary Disorder. New York: McGraw-Hill.Google Scholar
Kearny, C. and Macdonald, R. (1986) Intervention and sterilisation under floating exchange rates: the UK 1973–1983, European Economic Review, 30, 345–364.Google Scholar
Kenen, P. B. (1988) Managing Exchange Rates. London: Royal Institute of International Affairs.Google Scholar
Kenen, P. B. and Rodrik, D. (1986) Measuring and analyzing the effects of short-term volatility in real exchange rates, Review of Economics and Statistics, 68, 311–315.CrossRefGoogle Scholar
Keohane, R. O. (1983) The demand for international regimes. In Krasner, S. D. (ed), International Regimes. Ithaca, NY: Cornell University Press.Google Scholar
Keohane, R. O. (1984) After Hegemony: Cooperation and Discord in the World Political Economy. Princeton, NJ: Princeton University Press.Google Scholar
Keohane, R. O. and Nye, J. S. (1977) Power and Interdependence: World Politics in Transition. Boston: Little, Brown.Google Scholar
Klein, M. and Lewis, K. (1991). Learning about intervention target zones. National Bureau of Economic Research working paper No. 3674. Cambridge, MA: NBER.Google Scholar
Krasner, S. D. (1978) United States commercial and monetary policy: unravelling the paradox of external strength and internal weakness. In Katzenstein, P. J. (ed) Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States. Madison, WI: University of Wisconsin Press.Google Scholar
Krugman, P. (1988) Sustainability and the decline of the dollar. In Bryant, R. C., Holtham, G. and Hooper, P. (eds.), External Deficits and the Dollar: The Pit and the Pendulum. Washington, D.C.: Brookings Institution.Google Scholar
Krugman, P. (1989) Exchange-Rate Instability. Cambridge, MA: MIT Press.Google Scholar
Lastrapes, W. D. and Koray, F., (1990) Exchange rate volatility and U.S. multilateral trade flows, Journal of Macroeconomics, 12, 341–362.CrossRefGoogle Scholar
Meltzer, R. I. and Cohen, S. D. (1982) United States International Economic Policy in Action: Diversity of Decision Making. New York: Praeger.Google Scholar
Odell, J. S. (1982) U.S. International Monetary Policy: Markets, Power, and Ideas as Sources of Change. Princeton, NJ: Princeton University Press.Google Scholar
Powell, G. B. Jr. and Whitten, G. D. (1993) A cross-national analysis of economic voting: taking account of the political context, American Journal of Political Science, 37, 319–414.Google Scholar
Putnam, P. D. and Henning, C. R. (1989) The Bonn summit of 1978: a case study in coordination. In Cooper, Richard N. et al. , Can Nations Agree?: Issues in International Economic Cooperation. Washington, D.C.: Brookings Institution.Google Scholar
Quirk, P. J. (1977) Exchange rate policy in Japan: leaning against the wind, IMF Staff Papers, 24, 642–64.CrossRefGoogle Scholar
Strange, S. (1971) Sterling and British Policy: A Political Study of an International Currency in Decline. London: Oxford University Press.Google Scholar
Strange, S. (1976) International Monetary Relations. London: Oxford University Press.Google Scholar
Thursby, M. C. and Thursby, J. G. (1985) The uncertainty effects of floating exchange rates: empirical evidence of international trade flows. In Arndt, S., Sweeny, R. J. and Willett, T. D. (eds.), Exchange Rates, Trade, and the U.S. Economy. Cambridge, MA: Ballinger.Google Scholar
Volcker, P. A. and Gyohten, T. (1992) Changing Fortunes: The World's Money and the Threat to American Leadership. New York: Times Books.Google Scholar
Walter, A. (1991) World Power and World Money: The Role of Hegemony and International Monetary Order. New York: Harvester Wheatsheaf.Google Scholar
Webb, M. C. (1991) International economic structures, government interests, and international coordination of macroeconomic adjustment policies, International Organization, 45, 309–342.Google Scholar
White, H. (1980) Heteroscedasticity-consistent covariance matrix estimator and a direct test for heteroscedasticity, Econometrica, 48, 817–838.Google Scholar
Woolley, J. (1988) Partisan manipulation of the economy: another look at monetary policy with moving regression, Journal of Politics, 50, 335–360.CrossRefGoogle Scholar