Abstract EN:

Far from being an exogenous parameter, the exchange-rate regime a country has adopted results from a governmental decision. Our essay aims at explaining this decision. To this end, we pay special attention first to the goals followed by policy-makers, second to the sectoral consequences of an exchange-rate regime choice, which might lead to inter-sectoral conflicts, and third to the overall institutional context. Our analysis views producers of tradable and non-tradable goods as the primary winners and losers of an exchange-rate regime choice. The former favour fixed exchange-rates whereas the latter prefer a float. This sectoral conflict can lead to a situation where political uncertainty coincides with uncertainty about the choice of the exchange-rate regime. Our study subsequently shows that political uncertainty restrains the capacity of governments to defend a fixed parity. In particular, devaluations tend to occur during postelectoral periods. Finally, the credibility of a government's commitment to the defence of fixed parities declines when political uncertainty curtails its life-expectancy.