The Currency of Politics: The Political Theory of Money from Aristotle to Keynes

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Meanwhile, Keir Starmer faced a huge rebellion of his MPs over the SNP’s ceasefire amendment. Ed explains why this isn’t as big a threat to the Labour leader as it first appears... A fresh and splendidly clear guide to the intellectual history of monetary policy. . . . The Currency of Politics is an invaluable guide to why — and how to think about what comes next."—Felix Martin, Financial Times Currency Politics is an ambitious book on an important topic. Frieden is one of the best political economists and one of the best scholars writing on this subject." —Sebastian Edwards, University of California, Los Angeles and author of Toxic Aid The book is readable for both economists and political scientists. I recommend Currency Politics to both sets of scholars. Economists will learn about the political aspects of exchange-regime choice and political scientists about the economic aspects."—Lawrence H. Officer, EH.Net In the wake of the 2008 financial crisis, critical attention has shifted from the economy to the most fundamental feature of all market economies—money. Yet despite the centrality of political struggles over money, it remains difficult to articulate its democratic possibilities and limits. The Currency of Politicstakes readers from ancient Greece to today to provide an intellectual history of money, drawing on the insights of key political philosophers to show how money is not just a medium of exchange but also a central institution of political rule.

Jeffry A. Frieden, Professor of Government at Harvard University, has written a fine book on the determinants of decision-making regarding exchange-rate regime and, to some extent, exchange-rate level within the selected regime. The book is readable for both economists and political scientists. I recommend Currency Politics to both sets of scholars. Economists will learn about the political aspects of exchange-regime choice and political scientists about the economic aspects." -- Lawrence Officer, EH.net. Currency Politics is an ambitious book on an important topic. Frieden is one of the best political economists and one of the best scholars writing on this subject."—Sebastian Edwards, University of California, Los Angeles and author of Toxic Aid With this framework in place, a set of case studies is used to test the relevance of political economy to currency policy at various stages in history: namely, the United States during the transition to the gold standard (1862-96); European monetary integration between 1973-94; and Latin American policy between 1970-2010. The individual elements of Frieden’s theories are tested empirically to understand how important the political economy of currency policy is to explain voting patterns and government policy choices.

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The results of tweets are positive but small and not statistically distinguishable from zero before Trump was named as the Republican candidate. This would align with expectations, as Trump was considered a “long-shot” candidate at the time and thus the risk of him becoming president was perceived as low. During the campaign, when Trump was the presumptive Republican nominee, the effect of a tweet is approximately an increase of 0.05 pesos to the dollar (an approximately 0.25 percent change in percent terms). The effects also appear to persist in the window after the tweet. Again, this would align with expectations, as securing the nomination increased the probability of Trump being elected as president and thus should impact the effect of his tweets. Further, the tweets appear to have an effect regardless of whether they contain new or repeated policy information, providing support for both H1 and H2. The field of currency policy is increasingly important as the global economy becomes ever more integrated; however, it is poorly understood by the general public and often forgotten until a crisis arises. The influence of contingent political factors on the ability of governments to change their monetary policy is shown to be profound. Frieden makes his research accessible to a broader audience through Currency Politics; it is a challenging read in parts, but worth the effort to understand how national politics shape currency policy and the possible future of international currency regimes. The restricted dataset contains 80 tweets regarding Mexico. I assume (and confirm via review and hand-coding) that all remaining tweets are negative. I run several different event analyses, including on the time period after which he has announced his run but before the campaign as the Republican candidate (June 16, 2015 to May 3, 2016), the time period in which Trump is the presumed and then official candidate (May 3, 2016 to November 8, 2016), the time between election day and inauguration day (November 8, 2016 to January 20, 2016) and inauguration day to September 2017. The full list of dates and the text of the tweets is in the online appendix. Notably, if several tweets are issued in the same day, I treat them as a single event, and use the average sentiment score for all tweets on that day. In addition to the event analysis, I simply regress the probability of Trump winning on the Mexican peso. I use Nate Silver's 538 blog (the aggregate “chance of winning” polls-plus measure) for Trump's electoral probability. 16 Nate Silver's probability calculations are a widely used and respected aggregator of available public opinion polls. I also use the Iowa Betting Markets, given that it involves more than simply cheap talk, as bettors have a financial stake in the outcome and thus an incentive to gather accurate information about the electoral probabilities. 17 Even though written clearly, this book is a challenging read; it surprises readers with sudden enlightenment on profound concepts like the impossible trinity, substitution and income effects of currency, the Mundell-Fleming-Dornush Framework, the Dornush overshooting model, and the optimum currency area theory, among others. As the author relates these concepts to historical events, the reader is compelled to continue reading the book until its conclusion."—Shishir Shakya, Review of Regional Studies

In the use of case studies and the inclusion of historical and contextual factors, Currency Politics introduces a meaningful narrative to the analysis. Pure economic analysis is typically deterministic and struggles to account for contingent factors. By considering social, institutional and historical aspects, the text succeeds in treating the economy for what it really is: a complex and interdependent phenomenon. The appeal of this text to economists and political scientists alike is obvious; however, it also explains monetary economics with such clarity that it is unusually accessible – at least for the field of economics – to a more general audience. Think of it as occupying the middle ground between pop economics titles, like Freakonomics, and more formidable volumes, such as Thomas Piketty’s Capital in the Twenty-First Century.Alexander Slaski, Ph.D., is a postdoctoral fellow at Leiden University. His research focuses on the political economy of foreign direct investment, investment incentives, and currency flows in the developing world, particularly Latin America. His current book project examines how multinational firms shape regulatory policy in developing economies. His work has been published or is forthcoming in outlets including The Review of International Organizations, The Review of International Political Economy, and International Studies Quarterly. Notes H3: An increased probability of Trump being elected will lead to a decrease in the value of the peso. Empirical Approach An intellectual history of money that theoretically grounds the works of others working on democratizing money. The Currency of Politics is a great addition to the philosophy of money."—Valerie Schreur, Oeconomia It’s been a wild week in Westminster and it’s starting to look like the Tories are losing their grip. Ed and George chew over the Supreme Court’s judgment on Rwanda and what it means for Sunak. Could his new Foreign Secretary slam the brakes on some Tories’ hopes to leave the ECHR?

In addition, I also score the tweets using a sentiment analysis technique. This technique adds value by allowing me to relax the assumption that all tweets have the same negative effect on the peso. Given that the text of the tweets are different and thus contain different information, it seems plausible that some may have a stronger effect than others. Scoring the tweets using a sentiment analysis technique allowed me to measure these differences. Further, Trump's method of speech makes it challenging to reliably score according to a sentiment analysis. Traditionally positive words are used in negative ways, meaning that rules to score tweets according to an affective dictionary can be ineffective. For example, “a beautiful wall” would be a positive tweet according to the dictionary, yet would entail negative economic policy toward Mexico. However, Trump uses other negative words in their traditional negative sense. It is not clear, on net, how well the sentiment analysis captures the negative or positive content of the tweets, given Trump's unusual use of language and unique style of speech. This excellent book is for anyone who has ever wondered about the origins of the Eurozone, the causes of the currency crises, and the importance of the classical gold standard. Frieden combines lively historical narratives with statistical analyses to show that currency politics are pretty much the same across time and space. No other author could bring out the common threads running through the book's cases so clearly." —J. Lawrence Broz, University of San Diego Currency Politics: The Eurozone Crisis and the World's Financial Future,” the Alice Gorlin Memorial Lecture, Oakland University, April 8, 2015. [If your Flash plugins are not up to date, there is a lower res. version available here.] A deep ex­amination of the theoretical and political foundations of money that rescues the money discus­sion from economists."—Pratap Bhanu Mehta, Open MagazineIn the wake of the 2008 financial crisis, critical attention has shifted from the economy to the most fundamental feature of all market economies—money. Yet despite the centrality of political struggles over money, it remains difficult to articulate its democratic possibilities and limits. The Currency of Politics takes readers from ancient Greece to today to provide an intellectual history of money, drawing on the insights of key political philosophers to show how money is not just a medium of exchange but also a central institution of political rule. Tweets after Trump announces his presidential run, but before being selected as the nominee (47 tweets). Some societies use Oxford Academic personal accounts to provide access to their members. See below.