ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book shows the economists' and political scientists' approaches to exchange rate commitments and trying to reconcile them in an integrated political economy approach, where 'interests' and 'expectations' do appear as the two sides of the same coin. It argues that the rational behaviour of foreign exchange markets, but within a more structural definition of the credibility of exchange rate commitments which links together economic and political science perspectives. Indeed, when dealing with the problem of the reasons underlying a government's commitment to a pegged or fixed exchange rate regime, economic and political science analyses tend to differ consistently. In particular, it is possible to hypothesise that the more foreign economic commitments in general, and exchange rate policies in particular, are rooted in the economic and social structure of the country, the more these commitments are credible.
