Currency politics

In Currency politics, Jeffry Frieden makes the critical and yet often overlooked point that economic policies reflect the preferences of different groups in society and so the right choice—providing that the available sets of policies are sound—depends on whose preferences prevail. Within the theoretical framework that opens the book and supports the subsequent discussion, Frieden explores the relationship between currency policy and the distributional features—rather than the political-institutional ones—of national political economy. He sets currencies and exchange rates within the context of government policies and explores how exchange rates affect economic agents and how economic agents' preferences affect a country's exchange-rate policies. In other words, a government's exchange-rate policy ‘both reflects and is determined by the country's social as well as political structures and relations’ (p. 263). The author's main claim is that economic actors that are more exposed to currency volatility tend to prefer stable and predictable exchange rates; exporters, ceteris paribus, tend to prefer a depreciated real exchange rate

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