How Sensitive is Volatility to Exchange Rate Regimes?

Viviana Fernandez

No 135, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: It is usually conjectured that the nominal exchange rate should be more volatile under a free float than under a dirty float regime. This paper examines this issue for the Chilean economy. Specifically, in September 1999 the Central Bank of Chile eliminated the floating band for the nominal exchange rate, which operated since 1984, and established a free float. This lasted until the burst of the last Argentinean economic crisis in July 2001. Since then, the Central Bank has smoothed out the exchange rate path by selling US dollars and/or issuing US dollar-denominated bonds. We examine the free float period by assessing whether the increase in exchange rate volatility was as sharp as expected. We show that volatility went up, but only slightly.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.cea-uchile.cl/wp-content/uploads/doctrab/ASOCFILE120030327130127.pdf (application/pdf)

Related works:
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:edj:ceauch:135

Access Statistics for this paper

More papers in Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile Contact information at EDIRC.
Bibliographic data for series maintained by ().