Theories and empirical models of exchange rate regime choice have established that generally, economic considerations play a primary role in the regime choice decision and political factors play a secondary role in this policy decision. However, in frontier and transition economies, political economy factors play the more dominant role, to ensure electability. Using a sample of 49 countries in sub-Saharan Africa spanning the period 2000 to 2016 and an ordered logit regression model, we find supporting evidence that as the degree of democratization increases, there is a stronger preference for fixed exchange rates, implying that stability is more desirable than an independent monetary policy for re-election.
Biswas, Rita, "Democracy and Exchange Rate Regime Choice in Sub-Saharan Africa" (2020). Campus Conversations in Standish. 17.