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dc.titleResearch Insights: Can Exchange Rate Management Improve Welfare in Small Open Economies?
dc.contributor.authorHeresi, Rodrigo
dc.contributor.authorParrado, Eric
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageChile
dc.coverageSingapore
dc.date.available2024-10-02T00:10:00
dc.date.issue2024-10-02T00:10:00
dc.description.abstractBy 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.
dc.format.extent4
dc.identifier.doihttp://dx.doi.org/10.18235/0013277
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Research-Insights-Can-Exchange-Rate-Management-Improve-Welfare-in-Small-Open-Economies.pdf
dc.identifier.urlhttps://publications.iadb.org/publications/spanish/document/Perspectivas-de-investigacion-Puede-la-gestion-del-tipo-de-cambio-mejorar-el-bienestar-en-economias-pequenas-y-abiertas.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectExchange Rate
dc.subjectMonetary Policy
dc.subjectTrade Openness
dc.subjectEconomy
dc.subjectInterest Rate
dc.subjectInflation
dc.subjectMacroeconomy
dc.subjectExport
dc.subjectGross Domestic Product
dc.subjectFree Trade
dc.subject.jelcodeE52 - Monetary Policy
dc.subject.jelcodeE58 - Central Banks and Their Policies
dc.subject.jelcodeF41 - Open Economy Macroeconomics
idb.identifier.pubnumberIDB-CB-00979
idb.operationRG-K1098
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