Research Question of the Article: The authors J. Lawrence Broz and Jeffry A. Frieden seek to outline the significance of policies and strategies related to international monetary relations within national exchange rate policy and the international monetary system. The authors search for the identification of the policy choices within domestic paradigms of national governments and international policies on monetary relations. In identifying the major analytical arguments, theoretical approaches, and empirical conclusions of international monitory relations, the authors unveil that “the policy choices of national governments, surveying work on the domestic political economy of exchange rate choice” (Broz & Frieden, 2001, pg.322) upon international monetary affairs.
Main Arguments and Theories: The article’s main argument revolves around the speculative approaches, critical arguments, and pragmatic conclusions on “the political economy of international monetary relations” on exchange rate policies. An analytical survey is conducted to analyze the political considerations which affect the international monetary regime. The article is divided into three sections. The first section provides a brief overview of the evolutionary importance of “the political economy of international monetary relations”. The second section revolves around the “outline of the analytical problem, delineating the range of outcomes in need of explanation” (Broz & Frieden, 2001, pg.334). The third section unveils the proponents of national exchange rate policy and international exchange rate policies. It further signifies “the rise and evolution of regional and global exchange rate institutions” (Broz & Frieden, 2001, pg.335).
The first section revolves around a detailed international qualitative analysis of international monetary affairs. International monetary policies involve a fix-rate exchange system and a floating exchange rate system. The radical economy of exchange rate policy within domestic policies depends upon exchange rate decisions and anticipated objectives. The second section involves the analysis and influence of exchange rate policies on international monetary relations. The authors criticize the expenses and profits of “fixed exchange rate” and “floating exchange rate” policies in international monetary relations within the paradigms of two cardinal explanations. The first explanation emphasizes that the national and international currency policies have “domestic distributional implications that shape the sociopolitical environment in which policymakers assess costs and benefits” (Broz & Frieden, 2001, pg.336). The second explanation focuses on the influence of “domestic electoral, legislative, and bureaucratic institutions” on the inducements of legislators as they challenge the adjustments of exchange-rate policies. The authors emphasize that the “economic tradeoffs are politically and institutionally conditioned” (Broz & Frieden 2001).
According to the authors, regime choices involve a transaction between “stability vs flexibility” (Broz & Frieden, 2001, pg. 338) between goals to maintain the variety of preferences by the different regime and societal groups. The authors emphasize the notion that transactions taking place in fixed exchange rates need the subservience of monetary policies within domestic government for considerations on exchange rate and balance-of-payment. In the third section, the impact on and by the interest groups, class-based approaches, and political institutions is discussed by implicating it on the exchange rate policies. The stages of exchange rate policies and regime choices are influenced by interest groups, class-based Approaches (Partisan), and political institutions.
The authors provide an in-depth analysis of national policies related to international monetary relations. Three prominent factors spread a massive impact on the international monetary system which are national policies, global economic aspects, and the interaction between the governments of international states.
Closing Thoughts: The authors outline the qualitative and empirical analysis of the progressive development of international monetary policies in recent years. The international monetary policies on the domestic level involve economic interest at risk and the immense effect of political institutions on their currency policy choices. However, “The theoretical and empirical status of these arguments remains undecided” (Broz & Frieden, 2001, pg.340). The recommendation is provided for future research which should be conducted on the political economy of international relations to resolve theoretical and pragmatic ambiguities, integration of domestic sources, trade and financial policies within the legislative of international monetary affairs.
Broz, J. Lawrence, and Jeffry A. Frieden. “The political economy of international monetary relations.” Annual Review of Political Science 4.1 (2001): 317-343.