Spill-over dynamics of central bank interventions

Frank Westerhoff and Cristian Wieland
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Cristian Wieland: University of Osnabrueck, Department of Economics

Modeling, Computing, and Mastering Complexity 2003 from Society for Computational Economics

Abstract: Central banks frequently intervene in foreign exchange markets to reduce volatility or to correct misalignments. Such operations may be successful if they drive away destabilizing speculators. However, the speculators do not simply vanish but may reappear on other foreign exchange markets. Using a model in which traders are able to switch between foreign exchange markets, we demonstrate that while a central bank indeed has several means at hand to stabilize a specific market, the variability of the other markets depends on how the interventions are implemented.

Keywords: foreign exchange markets; central bank intervention; technical and fundamental analysis (search for similar items in EconPapers)
JEL-codes: E58 F31 G18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fin, nep-ifn, nep-mac and nep-mon
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Related works:
Journal Article: Spillover Dynamics of Central Bank Interventions (2004)
Journal Article: Spillover Dynamics of Central Bank Interventions (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:sce:cplx03:21

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