How successful is the G7 in managing exchange rates?
Marcel Fratzscher ()
No 24, Globalization Institute Working Papers from Federal Reserve Bank of Dallas
The paper assesses the extent to which the Group of Seven (G7) has been successful in its management of major currencies since the 1970s. Using an event-study approach, the paper finds evidence that the G7 has been overall effective in moving the U.S. dollar, yen and euro in the intended direction at horizons of up to three months after G7 meetings, but not at longer horizons. While the success of the G7 is partly dependent on the market environment, it is also to a significant degree endogenous to the policy process itself. The findings indicate that the reputation and credibility of the G7, as well as its ability to form and communicate a consensus among individual G7 members, are important determinants for the G7's ability to manage major currencies. The paper concludes by analyzing the factors that help the G7 build reputation and consensus, and by discussing the implications for global economic governance.
JEL-codes: F31 F33 F50 (search for similar items in EconPapers)
Pages: 47 pages
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
Note: Published as: Fratzscher, Marcel (2009), "How Successful Is the G7 in Managing Exchange Rates?," Journal of International Economics 79 (1): 78-88.
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Journal Article: How successful is the G7 in managing exchange rates? (2009)
Working Paper: How successful is the G7 in managing exchange rates? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:24
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