Dynamic exchange rates boost economy by adapting to global markets
The article explores the benefits of having flexible exchange rates when it comes to trading goods internationally. The researchers created a model that looks at how businesses decide to enter or leave export markets, considering factors like costs and productivity. They found that having flexible exchange rates can help improve the economy, but excessive volatility can lead to problems. The study shows that trading costs play a big role in shaping the economy and can impact the welfare of the country.