Evaluating a Modeling Assumption for Exchange Rates

An economist is creating a basic macroeconomic model to study the immediate impact of a new fiscal policy in a country with a fixed exchange rate system. Although the central bank allows for tiny, insignificant daily fluctuations, its stated policy is to maintain a stable currency value. For the purpose of this simplified, short-term analysis, which approach to modeling the exchange rate is most appropriate and why?

Justification for a Modeling Assumption

In macroeconomic modeling, assuming a perfectly constant nominal exchange rate for a country with a fixed exchange rate regime is considered a fundamental error because real-world fixed rates always exhibit minor fluctuations.

Evaluating a Modeling Simplification in Exchange Rate Regimes