Explaining Discrepancies between De Jure and De Facto Exchange Rate Regimes: A Constructivist Approach
Why some states publicly announce one type of exchange rate regime but in fact adopt another? Do states try to manipulate their currencies by creating discrepancies between words and deeds? My research intends to provide an ideational explanation to the gaps between de jure and de facto exchange rate regimes. More specifically, I argue that the classification and verification of exchange rate regime is a social fact rather than a “brutal fact”, and the ideas and perceptions held by national policy makers regarding proper government intervention lead them to code and frame regime choice in accordance with local understanding. Therefore, if policy makers perceive exchange rate management differently from neoliberal orthodoxy, they will be more likely to be judged as “renege” on policy proclamation by neoliberalism-based de facto classification.