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Exchange rate interventions and inflation expectations in an inflation targeting economy

Author

Listed:
  • Pablo Pincheira Brown

    (School of Business, Universidad Adolfo Ibáñez)

Abstract

We explore the impact of exchange rate interventions on inflation expectations and exchange rates in Chile. We consider two episodes of central bank interventions during the sample period 2007-2012. Our analysis indicate that interventions did have an impact on daily exchange rate returns. In terms of inflation expectations, we find that the intervention program carried out in 2008 had a significant, but relatively short-lived, impact on the distribution of inflation expectations at long horizons. In contrast, the intervention carried out in 2011 shows no relevant impact on the distribution of inflation expectations in Chile.

Suggested Citation

  • Pablo Pincheira Brown, 2018. "Exchange rate interventions and inflation expectations in an inflation targeting economy," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 33(2), pages 43-78, October.
    • Handle: RePEc:ila:anaeco:v:33:y:2018:i:2:p:43-78
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    Citations

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    Cited by:

    1. Holmes, Mark J. & Iregui, Ana María & Otero, Jesús, 2021. "The effects of FX-interventions on forecasters disagreement: A mixed data sampling view," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    2. Pincheira, Pablo & Hardy, Nicolás, 2021. "Forecasting aluminum prices with commodity currencies," Resources Policy, Elsevier, vol. 73(C).
    3. Pincheira Brown, Pablo & Hardy, Nicolás, 2019. "Forecasting base metal prices with the Chilean exchange rate," Resources Policy, Elsevier, vol. 62(C), pages 256-281.
    4. Pablo Pincheira Brown & Nicolás Hardy, 2023. "Forecasting base metal prices with exchange rate expectations," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 42(8), pages 2341-2362, December.

    More about this item

    Keywords

    Exchange rates; inflation expectations; inflation targeting; interventions;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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