Macroeconomic theory suggests that the choice of exchange rate (or, equivalently, monetary) regime is affected by the incidence of real or monetary shocks. Anecdotally, the Bretton Woods period in world economic history is thought to have been characterized by nominal, rather than real, shocks....

Economic theory suggests that government popularity may be related to the rate of change of economic quantities and the level of financial variables (like inflation or interest rates). Political theory suggests that this relationship may not be stable over time. The authors find that, although...