This paper studies the dynamics of endogenous business cycles and exchange rate volatility in a small open economy. Without market imperfections, domestic price and wage adjustments respond sluggishly to disequilibrium situations on real domestic markets while prices on international capital...

Las economías emergentes con metas de inflación (MI) se enfrentan a un dilema entre cumplir las condiciones teóricas de una «MI estricta», lo que implica un tipo de cambio totalmente flexible, o seguir una gestión más activa de su moneda («MI flexible»), lo que supone implementar...

Many central banks actively intervene in the foreign exchange (forex) market, although there is no consensus on its impact on the exchange rate level and volatility. We analyze the effects of daily forex interventions in four Latin American countries with infl ation targets —namely, Chile,...