The Rise and Fall of Foreign Exchange Market Intervention
AbstractThe premise of the paper is that the fervor for foreign exchange market intervention by U.S, and European monetary authorities has ebbed in recent years. A pattern of initial belief in the effectiveness of foreign exchange market intervention has recently been eroded, as is revealed by the absence of intervention in circumstances that in earlier times would have invoked it. Only the Bank of Japan among central banks of the developed world has not thusfar abandoned its faith that intervention can change the relative value of the yen as determined by market forces to conform with its notion of what that value should be. To explain why U.S. and European monetary authorities no longer believe that intervention is a tool that works, I review the equivocal record of past episodes, the inconclusive results of empirical research, and the problems of implementation that intervention advocates ignore.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7751.
Date of creation: Jun 2000
Date of revision:
Publication status: published as Anna J. Schwartz. "The Rise and Fall of Foreign Exchange Market Intervention as a Policy Tool." Journal of Financial Services Research, Volume 18, Numbers 2-3, 319-339 (2000)
Note: IFM ME
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Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F3 - International Economics - - International Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-03 (All new papers)
- NEP-FMK-2000-07-03 (Financial Markets)
- NEP-HIS-2000-07-03 (Business, Economic & Financial History)
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