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Central-bank intervention: recent literature, continuing controversy

Author

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  • Owen F. Humpage
Abstract
A review of recent literature on central-bank intervention in exchange markets, finding some qualified support for the power of intervention to influence market expectations, but finding little evidence to support the interventionist policy the G-3 countries have conducted in recent years.

Suggested Citation

  • Owen F. Humpage, 1991. "Central-bank intervention: recent literature, continuing controversy," Economic Review, Federal Reserve Bank of Cleveland, vol. 27(Q II), pages 12-26.
    • Handle: RePEc:fip:fedcer:y:1991:i:qii:p:12-26:n:v.27no.2
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    References listed on IDEAS

    as
    1. Jurgen Von Hagen, 1989. "Monetary targeting with exchange rate constraints: the Bundesbank in the 1980's," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 53-69.
    2. Martin Feldstein, 1988. "International Economic Cooperation," NBER Books, National Bureau of Economic Research, Inc, number feld88-4.
    3. Warren E. Weber, 1986. "Do sterilized interventions affect exchange rates?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 10(Sum), pages 14-23.
    4. Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, vol. 70(3), pages 393-408, June.
    5. Kristina Jacobson & George A. Kahn, 1989. "Lessons from West German monetary policy," Economic Review, Federal Reserve Bank of Kansas City, vol. 74(Apr), pages 18-35.
    6. Meese, Richard, 1990. "Currency Fluctuations in the Post-Bretton Woods Era," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 117-134, Winter.
    7. Obstfeld, Maurice, 1983. "Exchange rates, inflation, and the sterilization problem: Germany, 1975-1981," European Economic Review, Elsevier, vol. 21(1-2), pages 161-189.
    8. Jeffrey A. Frankel, 1990. "The Making of Exchange Rate Policy in the 1980s," NBER Working Papers 3539, National Bureau of Economic Research, Inc.
    9. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    10. Ito, Takatoshi, 1990. "Foreign Exchange Rate Expectations: Micro Survey Data," American Economic Review, American Economic Association, vol. 80(3), pages 434-449, June.
    11. Richard C. Marston, 1983. "Stabilization Policies in Open Economies," NBER Working Papers 1117, National Bureau of Economic Research, Inc.
    12. William P. Osterberg, 1989. "Intervention and the risk premium in foreign exchange rates," Working Papers (Old Series) 8908, Federal Reserve Bank of Cleveland.
    13. Owen F. Humpage, 1984. "Dollar intervention and the deutschemark-dollar exchange rate: a daily time-series model," Working Papers (Old Series) 8404, Federal Reserve Bank of Cleveland.
    14. Klein, Michael W., 1992. "Big effects of small interventions: The informational role of intervention in exchange rate policy," European Economic Review, Elsevier, vol. 36(4), pages 915-924, May.
    15. Dale Henderson, 1984. "Exchange Market Intervention Operations: Their Role in Financial Policy and Their Effects," NBER Chapters, in: Exchange Rate Theory and Practice, pages 359-406, National Bureau of Economic Research, Inc.
    16. Frankel, Jeffrey A & Rockett, Katharine E, 1988. "International Macroeconomic Policy Coordination When Policymakers Do Not Agree on the True Model," American Economic Review, American Economic Association, vol. 78(3), pages 318-340, June.
    17. Marston, Richard C., 1985. "Stabilization policies in open economies," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 17, pages 859-916, Elsevier.
    18. Michael M. Hutchison, 1984. "Intervention, deficit finance and real exchange rates: the case of Japan," Economic Review, Federal Reserve Bank of San Francisco, issue Win, pages 27-44.
    19. John F. O. Bilson & Richard C. Marston, 1984. "Exchange Rate Theory and Practice," NBER Books, National Bureau of Economic Research, Inc, number bils84-1.
    20. Loopesko, Bonnie E., 1984. "Relationships among exchange rates, intervention, and interest rates: An empirical investigation," Journal of International Money and Finance, Elsevier, vol. 3(3), pages 257-277, December.
    21. Juann H. Hung, 1991. "Noise trading and the effectiveness of sterilized foreign exchange intervention," Research Paper 9111, Federal Reserve Bank of New York.
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    Cited by:

    1. Shinji Takagi & Hiroki Okada, 2013. "Central Bank Independence and the Signaling Effect of Intervention: A Preliminary Exploration," Discussion Papers in Economics and Business 13-04, Osaka University, Graduate School of Economics.
    2. Owen F. Humpage, 1994. "Institutional aspects of U.S. intervention," Economic Review, Federal Reserve Bank of Cleveland, vol. 30(Q I), pages 2-19.
    3. Juann H. Hung, 1995. "Intervention strategies and exchange rate volatility: a noise trading perspective," Research Paper 9515, Federal Reserve Bank of New York.
    4. Richard T. Baillie & William P. Osterberg, 1991. "The risk premium in forward foreign exchange markets and G-3 central bank intervention: evidence of daily effects, 1985-1990," Working Papers (Old Series) 9109, Federal Reserve Bank of Cleveland.
    5. Klein, Michael W., 1993. "The accuracy of reports of foreign exchange intervention," Journal of International Money and Finance, Elsevier, vol. 12(6), pages 644-653, December.
    6. Richard T. Baillie & Owen F. Humpage, 1992. "Post-Louvre intervention: did target zones stabilize the dollar?," Working Papers (Old Series) 9203, Federal Reserve Bank of Cleveland.
    7. Woosik Moon & Yeongseop Rhee, 2006. "Spot and foward market intervention during the 1997 Korean currency crisis," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(238), pages 243-268.
    8. Robert Andrew & John Broadbent, 1994. "Reserve Bank Operations in the Foreign Exchange Market: Effectiveness and Profitability," RBA Research Discussion Papers rdp9406, Reserve Bank of Australia.
    9. Woosik Moon & Yeongseop Rhee, 2006. "Spot and foward market intervention during the 1997 Korean currency crisis," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 59(238), pages 243-268.
    10. Rebecca Wetmore Humes & William P. Osterberg, 1993. "The inaccuracy of newspaper reports of U.S. foreign exchange intervention," Economic Review, Federal Reserve Bank of Cleveland, vol. 29(Q IV), pages 25-33.

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