Issues & Challenges More recent analysis more equivocal: With high dollarization, limited access to international capital markets, exchange rate can have perverse balance sheet effects which may justify leaning against the wind (Cespedes & others (2004), Moron & Winkelried (2005), Roger & others (2009)) Policy rule including exchange rate may be more robust to incorrect specification of model of exchange rate determination (Wolmershauser (2006)
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