Abstract
Two dual exchange rate regimes are compared. Under one, the official market clears through changes in international reserves. Under the other, the central bank implements a rationing scheme so as to keep international reserves constant. The paper discusses the effects on inflation, the balance of payments, the real exchange rate, and the spread between the free and the official exchange rate of various economic policies, including exchange rate policy, fiscal policy, and unification of the exchange markets. It concludes that the steady-state effects for most of those policies are qualitatively the same under both regimes.
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