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“Liberalize Pa More?”: Analyzing the Impact of Further Easing Foreign Exchange Rules on the Philippine Economy

This paper constructs a foreign exchange (FX) liberalization index and examines its impact on domestic economic growth in the Philippines from 2006 to 2022. Using the Generalized Method of Moments approach, our findings imply that, in general, the liberalization of FX regulations has helped mobilize resources to finance the requirements of the domestic economy. In particular, the further opening of the country’s financial accounts led to greater FX transactions, specifically portfolio inflows. In turn, monetary and financial markets, notably the stock market, have expanded since 2007. These positive and significant effects to growth also suggest that the easing of FX rules have underscored the importance of greater openness as essential component of macroeconomic policy.


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