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Foreign exchange intervention and central bank independence: The Latin American experience

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  • Nunes, Mauricio
  • Da Silva, Sergio

Abstract

Employing data from 13 Latin American countries, we find that greater central bank independence is associated with lesser intervention in the foreign exchange market, and also with leaning-against-the-wind intervention. We also find that the structural reforms that occurred in Latin America mostly in the 1990s helped to reduce the need for foreign exchange intervention.

Suggested Citation

  • Nunes, Mauricio & Da Silva, Sergio, 2007. "Foreign exchange intervention and central bank independence: The Latin American experience," MPRA Paper 5073, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5073
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    References listed on IDEAS

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    1. Eijffinger, S.C.W., 1993. "Central bank independence in twelve industrial countries," Other publications TiSEM 0401b17a-e2c7-4179-ace9-a, Tilburg University, School of Economics and Management.
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    3. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    4. Mark P. Taylor & Lucio Sarno, 2001. "Official Intervention in the Foreign Exchange Market: Is It Effective and, If So, How Does It Work?," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 839-868, September.
    5. Mark P. Taylor, 2004. "Is Official Exchange Rate Intervention Effective?," Economica, London School of Economics and Political Science, vol. 71, pages 1-11, February.
    6. Cukierman Alex, 1992. "Central Bank Strategy, Credibility, And Independance: Theory And Evidence," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 1-10, December.
    7. Mr. Luis Ignacio Jácome & Mr. Francisco F. Vazquez, 2005. "Any Link Between Legal Central Bank Independence and Inflation? Evidence from Latin America and the Caribbean," IMF Working Papers 2005/075, International Monetary Fund.
    8. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4301, Inter-American Development Bank, Research Department.
    9. Lora, Eduardo, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
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    13. Luis I. Jacome H., 2002. "Legal Central Bank independence and inflation in Latin America during the 1990s," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 5(1), pages 157-194, June.
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    More about this item

    Keywords

    central bank independence; foreign exchange intervention; Latin America;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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