Finance Papers

Document Type

Journal Article

Date of this Version

9-1995

Publication Source

American Economic Review

Volume

85

Issue

4

Start Page

691

Last Page

715

Abstract

This paper develops a model of central-bank intervention based upon a policy characteristic of foreign-exchange interventions by the United States, Germany, and Japan in the late 1980's and evaluates it empirically. Central bankers intervene with greater intensity as rates deviate from target levels, but they also try to stabilize rates around current levels. The model is estimated using exchange rates and data based upon observed central-bank interventions. Interestingly, the estimates of the model are consistent with the predictions of the theoretical model for both the deutsche-mark/dollar rate and, less strongly, for the yen/dollar rate.

Copyright/Permission Statement

Copyright © 1995 by the American Economic Association. Karen K. Lewis. "Occasional Interventions to Target Rates." The American Economic Review 85, no. 4 (1995): 691-715.

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Date Posted: 27 November 2017

This document has been peer reviewed.