Can a Polak Model be applied in the economy with Floating/Flexible exchange rate?

21 February 2024 1 1K Report

I wanted to use the Polak Model to investigate the Dynamics of Balance of Payment in Tanzania. I came across the concept that, Polak model is a monetary approach to the balance of payment which seeks to model a small, open economy operating under fixed nominal exchange rate.

Now my question is, can it be used in developing countries with a flexible exchange rate?

Paballo Maphike

Thank you so much for this question. The answers will hopefully give me insights into the topic that I want to research about. It is along the same line but hopefully we will find the answers that we need.

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