Comfort in Floating: Taking Stock of Twenty Years of Freely-Floating Exchange Rate in Chile

Elias Albagli, Mauricio Calani, Metodij Hadzi-Vaskov, Mario Marcel and Luca Ricci

No 14967, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Chile offers an example of a country that has overcome the fear of floating by reducing balance sheet mismatches, enhancing financial market development, as well as improving monetary, fiscal, and political institutions, and strengthening policy credibility. Under the floating regime, Chile’s economic adjustment to external shocks appears significantly improved, and its exchange rate pass-through 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 balance sheet mismatches, a larger hedging market, and a lower exchange rate pass-through).

Keywords: Exchange rate regime; Fx derivatives; Hedging; Exchange rate pass-through; Policy credibility; Central bank independence (search for similar items in EconPapers)
JEL-codes: E31 E52 F31 F33 F41 G15 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://cepr.org/publications/DP14967 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Comfort in Floating: Taking Stock of Twenty Years of Freely-Floating Exchange Rate in Chile (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:14967

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14967

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().