The Efficient Sterilization of Central Bank: Suitable Estimation Method

  • Phung T. K. Nguyen
  • Hac D. Le
  • Hang T. T. Hoang
Conference paper
Part of the Studies in Computational Intelligence book series (SCI, volume 760)

Abstract

A country’s foreign exchange reserve plays an important role for the security of its economy. However, a large accumulation of foreign exchange reserves without central bank’s intervention will lead to inflation. Therefore, those must be accompanied by neutralizing its impact on the monetary market. The different econometric methods have been chosen in the previous literature to estimate the sterilization effect in many countries in the world. This study provides an overview of estimation methods for the efficiency of central bank’s sterilization in foreign market. It also shows empirical evidences for the application of these methods in studies in the world. The results show that the 2SLS is the most suitable method to estimate the eficient sterilization of Central bank.

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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  • Phung T. K. Nguyen
    • 1
  • Hac D. Le
    • 1
  • Hang T. T. Hoang
    • 1
  1. 1.Banking University of Ho Chi Minh CityHo Chi Minh CityVietnam

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