TY  - GEN
AU  - Heresi, Rodrigo
AU  - Parrado, Eric
TI  - Research Insights: Can Exchange Rate Management Improve Welfare in Small Open Economies?
PY  - 2024
Y1  - 2024/10/02
DO  - 10.18235/0013277
AB  - By reducing macroeconomic volatility, exchange rate management can generate significant welfare gains in economies with a high degree of trade openness. A country like Singapore, with trade openness (exports  imports) at 280% of GDP, has benefited significantly from managing the exchange rate, showing 1.5% welfare gains in permanent consumption, when compared to the mainstream interest rate rule in which the exchange rate floats freely. In the case of an emerging free-floater economy like Chile, any degree of trade openness above 100% (currently at 70%) would also justify using a managed exchange rate policy that avoids excessive exchange rate volatility.
UR  - https://doi.org/10.18235/0013277
ER  -