One reason a developing country with a relatively open economy would be hesitant to devalue its currency is the effect of the change in the official exchange rate on the government budget items related to the external debt overhang. It is shown that in an economy characterized by mark-up pricing...

After the 1997 financial crisis, several East Asian economies, including the Philippines, adopted an inflation-targeting framework. The shift in the policy stance of the Bangko Sentral ng Pilipinas (BSP) came with the acknowledgement that a flexible exchange rate framework is better suited to...