The Rise and Fall of Foreign Exchange Market Intervention

Anna Schwartz

No 7751, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The premise of the paper is that the fervor for foreign exchange market intervention by U.S, and European monetary authorities has ebbed in recent years. A pattern of initial belief in the effectiveness of foreign exchange market intervention has recently been eroded, as is revealed by the absence of intervention in circumstances that in earlier times would have invoked it. Only the Bank of Japan among central banks of the developed world has not thusfar abandoned its faith that intervention can change the relative value of the yen as determined by market forces to conform with its notion of what that value should be. To explain why U.S. and European monetary authorities no longer believe that intervention is a tool that works, I review the equivocal record of past episodes, the inconclusive results of empirical research, and the problems of implementation that intervention advocates ignore.

JEL-codes: E5 F3 (search for similar items in EconPapers)
Date: 2000-06
New Economics Papers: this item is included in nep-fmk and nep-his
Note: IFM ME
References: View complete reference list from CitEc
Citations: View citations in EconPapers (77)

Published as Anna J. Schwartz. "The Rise and Fall of Foreign Exchange Market Intervention as a Policy Tool." Journal of Financial Services Research, Volume 18, Numbers 2-3, 319-339 (2000)

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