Laura Alfaro, Fabio Kanczuk, 15 July 2013

According to the IMF, last decade saw a number of countries actively managing their exchange rates. Is this a good way for emerging economies to protect themselves from the large swings of international markets? This column presents a new ‘pseudo-flexible’ exchange rate policy for emerging economies that is both sustainable and allows for accumulating reserves in conjunction with domestic debt; resulting in low exchange-rate volatility.

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