Browsing by Author "Calani Cadena, Miguel Mauricio"

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    Comfort in floating: taking stock of twenty years of freely floating exchange rate in Chile
    (Banco Central de Chile, 2021-10) Albagli, Elías; Calani Cadena, Miguel Mauricio; Hadzi-Vaskov, Metodij; Marcel Cullel, Mario; Ricci, Luca Antonio
    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).