Talks, financial operations or both? Generalizing central banks' FX reaction functions

Oscar Bernal and Jean-Yves Gnabo

No 07-03.RS, DULBEA Working Papers from ULB -- Universite Libre de Bruxelles

Abstract: This paper generalizes central banks’ FX interventions reaction functions to include oral interventions alongside actual ones. Using Japanese data for the 1991-2004 period, we estimate an ordered probit explaining the occurrence of each type of intervention and evaluating the extent to which oral and actual interventions are substitutes or complements. Our results indicate that monetary authorities tend to adopt progressively stronger measures as the exchange rate behaves in an increasingly unfavorable way. This suggests that words and acts are used as complements only in extreme cases.

Keywords: Central banks; Foreign exchange market; Interventions; Communication policy (search for similar items in EconPapers)
JEL-codes: E58 F31 G15 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-cba, nep-dcm, nep-ifn, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Published by: ULB, DULBEA

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/13622/1/dul-0089.pdf dul-0089 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dul:wpaper:07-03rs

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... ulb.ac.be:2013/13622

Access Statistics for this paper

More papers in DULBEA Working Papers from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().