Comfort in floating: taking stock of twenty years of freely floating exchange rate in Chile
Chile offers an example of a country that has overcome the fear of floating by reducing balance-sheet mismatches; enhancing financial-market development; and improving monetary, fiscal, and political institutions; while strengthening policy credibility. Under the floating regime, Chile’s economic ad...
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| Autores principales: | , , , , |
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| Formato: | Artículo |
| Lenguaje: | English |
| Publicado: |
Banco Central de Chile
2021
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/20.500.12580/6134 |
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| Sumario: | Chile offers an example of a country that has overcome the fear of floating by reducing balance-sheet mismatches; enhancing financial-market development; and improving monetary, fiscal, and political institutions; while strengthening policy credibility. Under the floating regime, Chile’s economic adjustment to external shocks appears significantly improved, and its exchange-rate passthrough has substantially declined. Our results reinforce the case that moving to a clear and credible floating regime can be associated with a reduction in the fear of floating via economic transformation (like smaller balancesheet mismatches, a larger hedging market, and a lower exchange-rate passthrough). |
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