 Foreign exchange intervention when interest rates are zero: Does the portfolio balance channel matter after all?Journal of International Money and Finance, 2015, vol. 57, issue C, 185-199 Abstract: This paper provides an empirical investigation of transmission channels of central bank foreign exchange intervention when interest rates are zero and traditional monetary policy options are constrained. The paper develops empirically testable hypotheses regarding the functioning of the intervention transmission channels under study. These hypotheses evolve around whether or not the market is aware or unaware of intervention. Official daily data on interventions in the JPY/USD market during the 1999 to 2004 Japanese zero-interest rate period facilitate the analysis. The results of the analysis are consistent with the suggestion that intervention when interest rates are zero works through the portfolio-balance channel. Keywords: Zero interest rates; Foreign exchange market intervention; Channels of transmission (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:57:y:2015:i:c:p:185-199 DOI: 10.1016/j.jimonfin.2015.07.015 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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