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Sterilization costs and exchange rate targeting

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  • Kletzer, Kenneth
  • Spiegel, Mark M.

Abstract

This paper examines the movements of exchange rates and capital inflows in an environment where an optimizing central bank pursuing the joint goals of inflation and output targeting engages in costly sterilization activities.
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Suggested Citation

  • Kletzer, Kenneth & Spiegel, Mark M., 2004. "Sterilization costs and exchange rate targeting," Journal of International Money and Finance, Elsevier, vol. 23(6), pages 897-915, October.
    • Handle: RePEc:eee:jimfin:v:23:y:2004:i:6:p:897-915
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    Cited by:

    1. David Archer & Paul Moser-Boehm, 2013. "Central bank finances," BIS Papers, Bank for International Settlements, number 71.
    2. Javier Bianchi & Guido Lorenzoni, 2021. "The Prudential Use of Capital Controls and Foreign Currency Reserves," NBER Working Papers 29476, National Bureau of Economic Research, Inc.
    3. Li, Jie & Rajan, Ramkishen S., 2006. "Can High Reserves Offset Weak Fundamentals? A Simple Model of Precautionary Demand for Reserves," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(3), pages 317-328.
    4. Ljungwall, Christer & Xiong, Yi & Zou, Yutong, 2009. "Central Bank Financial Strength And The Cost Of Sterilization In China," Working Paper Series 2009-8, Stockholm School of Economics, China Economic Research Center.
    5. Ljungwall, Christer & Xiong, Yi & Yutong, Zou, 2013. "Central bank financial strength and the cost of sterilization in China," China Economic Review, Elsevier, vol. 25(C), pages 105-116.
    6. Anubha Dhasmana, 2021. "Employment growth in the face of exchange rate uncertainty: The role of trade and foreign equity finance," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 79-117, July.
    7. David Hauner, 2006. "A Fiscal Price Tag for International Reserves," International Finance, Wiley Blackwell, vol. 9(2), pages 169-195, August.
    8. Mr. David Hauner, 2005. "A Fiscal Price Tag for International Reserves," IMF Working Papers 2005/081, International Monetary Fund.
    9. Manuel Amador & Javier Bianchi & Luigi Bocola & Fabrizio Perri, 2020. "Exchange Rate Policies at the Zero Lower Bound," Review of Economic Studies, Oxford University Press, vol. 87(4), pages 1605-1645.
    10. Julien Pinter, 2018. "Does Central Bank Financial Strength Really Matter for Inflation? The Key Role of the Fiscal Support," Open Economies Review, Springer, vol. 29(5), pages 911-952, November.
    11. Bitar, Joseph, 2021. "The unique dollarization case of Lebanon," Economic Systems, Elsevier, vol. 45(2).
    12. Menachem Brenner & Meir Sokoler, 2010. "Inflation Targeting and Exchange Rate Regimes: Evidence from the Financial Markets," Review of Finance, European Finance Association, vol. 14(2), pages 295-311.

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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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