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The macroeconomic impact of foreign exchange intervention: An empirical study of Thailand

Akihiro Kubo

International Review of Economics & Finance, 2017, vol. 49, issue C, 243-254

Abstract: This paper focuses on empirically investigating the efficacy of foreign exchange intervention in the Thai economy by simulation analyses. We find that foreign reserves are determinants of exchange rate dynamics, whereas the uncovered interest parity condition does not hold. We also find that foreign exchange intervention influences the inflation rate via the exchange rate, although by a lesser degree, whereas such an intervention for an extended period is likely to incur higher costs of the macro economy.

Keywords: Foreign exchange intervention; Monetary policy; Small open economy model; Thailand (search for similar items in EconPapers)
JEL-codes: F31 E52 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:reveco:v:49:y:2017:i:c:p:243-254