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Intervention policy of the BoJ: a unified approach

  • Michel Beine
  • Oscar Bernal Diaz
  • Jean-Yves Gnabo
  • Christelle Lecourt

Intervening in the FX market implies a complex decision process for central banks. Monetary authorities have to decide whether to intervene or not, and if so, when and how. Since the successive steps of this procedure are likely to be highly interdependent, we adopt a nested logit approach to capture their relationships and to characterize the prominent features of the various steps of the intervention decision. Our findings shed some light on the determinants of central bank interventions, on the so-called secrecy puzzle and on the identification of the variables influencing the detection of foreign exchange transactions by market traders.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series DULBEA Working Papers with number 06-15.RS.

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Date of creation: Nov 2006
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Publication status: Published by: DULBEA - Université Libre de Bruxelles, Department of Applied Economics
Handle: RePEc:dul:wpaper:06-15rs
Contact details of provider: Web page: http://difusion.ulb.ac.be

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  40. repec:rus:hseeco:21608 is not listed on IDEAS
  41. Gnabo, Jean-Yves & Laurent, Sébastien & Lecourt, Christelle, 2009. "Does transparency in central bank intervention policy bring noise to the FX market?: The case of the Bank of Japan," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(1), pages 94-111, February.
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