Non-Sterilised Intervention and the Floating Exchange Rate
The collapse of the Bretton Woods system has released Central Banks from the commitment to maintain fixed parities. Nonetheless, monetary authorities of all countries continue to play an active role in the foreign-exchange market. While official participation has been particularly extensive in the case of the EMS countries, it has also been a factor in the currency markets outside of the EMS. The movements in the value of the US dollar in 1990, for example, were frequently interrupted by waves of official intervention.
KeywordsExchange Rate Central Bank Small Open Economy Domestic Currency Real Balance
Unable to display preview. Download preview PDF.
- Argy, Victor E. (1982) ‘Exchange Rate Management in Theory and Practice,’ Princeton Studies in International Finance, no. 50.Google Scholar
- Boyer, Russell S. (1978) ‘Optimal Foreign Exchange Market Intervention’, Journal of Political Economy ’86 (December) pp. 1045–55.Google Scholar
- Buiter, Willem H. (1979) ‘Optimal Foreign Exchange Market Intervention with Rational Expectations’, in Martin, J. and Smith, A. (eds), Trade and Payments Adjustment under Flexible Exchange Rates, London. Macmillan.Google Scholar
- Feldstein, Martin (1986) ‘New Evidence on the Effects of Exchange Rate Intervention’, NBER Working Paper, no. 2052 (October).Google Scholar
- Kenen, Peter B. (1987) ‘Exchange Rate Management: What Role for Intervention?’, American Economic Review, 77 (May 1987) pp. 194–9.Google Scholar
- Obstfeld, Maurice and Stockman, Alan C. (1985) ‘Exchange-Rate Dynamics’, in Nenan, P.B. and Jones R.W. (eds), Handbook of International Economics, vol. 2, Amsterdam, North-Holland.Google Scholar
- Turnovsky, Stephen J. (1983) ‘Exchange Market Intervention Policies in a Small Open Economy’, in Bhandari, J.S., and Putnam, B.H. (eds), Economic Interdependence and Flexible Exchange Rates, Cambridge, Mass., MIT Press.Google Scholar