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Communicating policy options at the zero bound

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  • Burkhard, Lukas
  • Fischer, Andreas M.

Abstract

This paper examines a special episode in communication practices of the Swiss National Bank (SNB) when short-term interest rates reached the zero bound. Non-sterilized foreign exchange interventions were frequently mentioned as a potential instrument. We ask how the financial markets responded to the SNB's repeated references of non-sterilized interventions? The empirical results with high-frequency data provide strong evidence that SNB intervention references depreciated the domestic currency for several hours. The case study supports the view that communication is an effective tool for monetary policy in unusual situations, as well.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 28 (2009)
Issue (Month): 5 (September)
Pages: 742-754

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Handle: RePEc:eee:jimfin:v:28:y:2009:i:5:p:742-754

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Web page: http://www.elsevier.com/locate/inca/30443

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Keywords: Exchange rate Central bank communication Zero bound;

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References

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  28. repec:fip:fedgsq:y:2002:i:nov21 is not listed on IDEAS
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Citations

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Cited by:
  1. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," NBER Working Papers 13932, National Bureau of Economic Research, Inc.
  2. Büchel, Konstantin, 2013. "Do words matter? The impact of communication on the PIIGS' CDS and bond yield spreads during Europe's sovereign debt crisis," European Journal of Political Economy, Elsevier, vol. 32(C), pages 412-431.
  3. Kaufmann, Daniel & Bäurle, Gregor, 2013. "Exchange Rate and Price Dynamics at the Zero Lower Bound," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79872, Verein für Socialpolitik / German Economic Association.

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