Banque de France paper offers alternative to China's exchange rate regime


A new Banque de France paper studies a semi-open economy where the private sector has no access to international capital markets but the central bank has full access. Moreover, it assumes limited financial development generates a large demand for saving instruments by the private sector.

Optimal exchange rate policy in a growing semi-open economy, by Philippe Bacchetta, Kenza Benhima and Yannick Kalantzis, argues it is optimal for such a semi-open economy to have an initial real depreciation of

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