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FX intervention in the Yen-US dollar market : a coordination channel perspective
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Reitz, Stefan and Taylor, Mark P. (2012) FX intervention in the Yen-US dollar market : a coordination channel perspective. International Economics and Economic Policy, Vol.9 (No.2). pp. 111-128. doi:10.1007/s10368-012-0208-5
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Official URL: http://www.springer.com/economics/international+ec...
Abstract
The coordination channel has recently been established as an additional means by which foreign exchange market intervention may be effective. It is conjectured that strong and persistent misalignments of the exchange rate are caused by a coordination failure among fundamentals-based traders. In such situations official intervention may act as a coordinating signal, encouraging traders to engage in stabilizing speculation. We apply the framework developed in Reitz and Taylor (Eur Econ Rev 52(1), 55–76 2008) to daily data on the yen-US dollar exchange rate and on Federal Reserve and Japanese Ministry of Finance intervention operations. The results provide further support for the coordination channel of intervention effectiveness.
| Item Type: | Journal Article | ||||
|---|---|---|---|---|---|
| Divisions: | Faculty of Social Sciences > Economics | ||||
| Journal or Publication Title: | International Economics and Economic Policy | ||||
| Publisher: | Springer | ||||
| ISSN: | 1612-4804 | ||||
| Official Date: | June 2012 | ||||
| Dates: |
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| Volume: | Vol.9 | ||||
| Number: | No.2 | ||||
| Page Range: | pp. 111-128 | ||||
| DOI: | 10.1007/s10368-012-0208-5 | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Restricted or Subscription Access |
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