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An assessment of some open issues in the analysis of foreign exchange intervention

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  • Paolo Vitale

    (D'Annunzio University and CEPR, Italy)

Abstract

We discuss some fundamental aspects of the study of foreign exchange intervention. In particular, we analyse some unresolved issues, such as the secrecy puzzle, the relevance of the signalling and portfolio-balance effect hypotheses, the identification of the impact of foreign exchange intervention on currency values. We argue that: (i) the unresolved nature of these issues is partly due to the absence of a market microstructure perspective in most of the existing analysis of foreign exchange intervention; and (ii) that recent promising advances in this strand of research have not fully exploited the potential of such perspective. Copyright © 2007 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.

Volume (Year): 12 (2007)
Issue (Month): 2 ()
Pages: 155-170

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Handle: RePEc:ijf:ijfiec:v:12:y:2007:i:2:p:155-170

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Cited by:
  1. Lukas Menkhoff, 2010. "High-Frequency Analysis Of Foreign Exchange Interventions: What Do We Learn?," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 85-112, 02.
  2. Reitz, Stefan & Taylor, Mark P., 2008. "The coordination channel of foreign exchange intervention: A nonlinear microstructural analysis," European Economic Review, Elsevier, vol. 52(1), pages 55-76, January.
  3. Shinji Takagi & Hiroki Okada, 2013. "Central Bank Independence and the Signaling Effect of Intervention: A Preliminary Exploration," Discussion Papers in Economics and Business 13-04, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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