Intervention Policy under Floating Exchange Rates: An Analysis of the Swiss Case
AbstractEmpirical analyses of central bank foreign-exchange market intervention are typically cast in terms of a dichotomy between "leaning against the wind" and "exchange-rate targeting." Apparently, the profession has arrived at an almost unanimous verdict in favor of the former. Th is paper challenges the ruling consensus. Econometric estimates are c omputed on the basis of a more flexible intervention response functio n and a new proposal for removing simultaneous-equations bias in the context of intervention analyses. The obtained results suggest that, in situations of conflict, the Swiss National Bank has given priority to exchange-rate targeting over exchange-rate smoothing. Copyright 1987 by The Review of Economic Studies Limited.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 54 (1987)
Issue (Month): 216 (November)
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- Douglas Hodgson, 2011. "A test for the presence of central bank intervention in the foreign exchange market with an application to the Bank of Canada," Empirical Economics, Springer, vol. 41(3), pages 681-701, December.
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- Frenkel, Michael & Pierdzioch, Christian & Stadtmann, Georg, 2005. "Japanese and U.S. interventions in the yen/U.S. dollar market: estimating the monetary authorities' reaction functions," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(4-5), pages 680-698, September.
- Douglas James Hodgson, 2009. "A Test for the Presence of Central Bank Intervention in the Foreign Exchange Market With an Application to the Bank of Canada," CIRANO Working Papers 2009s-14, CIRANO.
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