Revisiting Exchange Rate Rules

Kathryn Dominguez

IMF Economic Review, 2020, vol. 68, issue 3, No 7, 693-719

Abstract: Abstract What distinguishes foreign exchange interventions that are stabilizing from those that are manipulative? In the current no-official-agreed-upon rules environment any country that intervenes and builds up bilateral trade surpluses opens itself to charges of currency manipulation. Emerging market countries are especially susceptible because many of them rely on exchange rate stabilization policies to offset external shocks and facilitate trade. This paper proposes an approach to setting international exchange rate policy rules that discourage currency manipulation as well as spurious allegations of manipulation. It examines how intervention operations work, and demonstrates how counterfactual matching techniques can be used to test for causal links between intervention policies and exchange rate movements.

JEL-codes: E58 F31 F32 F33 F38 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (10)

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DOI: 10.1057/s41308-020-00120-6

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