@article{article_1309952, title={Is An Interest-Free Small Open Economy Possible In A Global Economy?}, journal={JOEEP: Journal of Emerging Economies and Policy}, volume={8}, pages={325–334}, year={2023}, author={Harunogullari, Erdal}, keywords={İslam Ekonomisi ve Finansı, Kâr-Zarar Ortaklığı, Küçük Açık İslami Ekonomik Model, İslami Ekonomisi Modeli}, abstract={This article examines the feasibility and effects of a small, interest-free open economy. It analyzes the impact of profit-loss-sharing (PLS) scenarios on exchange rates and capital mobility using the uncovered interest parity (UIP) condition. Descriptive analysis and stochastic simulation model were used in the article. The study argues that a small open economy can thrive globally with a compatible PLS system and flexible exchange rates. Findings suggest that an Islamic open economy under flexible exchange rates achieves higher output growth, lower inflation, and improved welfare compared to a traditional open economy. The article provides empirical evidence and policy recommendations, addressing a research gap in understanding the relationship of a small open Islamic economy with the outside world.}, number={1}, publisher={Seyfettin ERDOĞAN}