Dundee Discussion Papers in Economics 260: The signalling channel of Central Bank interventions: Modelling the Yen/US dollar exchange rate

Yu-Fu Chen, Michael Funke, Nicole Glanemann

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    Abstract

    This paper presents a theoretical framework analysing the signalling channel of exchange rate interventions as an informational trigger. We develop an implicit target zone framework with learning in order to model the signalling channel. The theoretical premise of the model is that interventions convey signals that communicate information about the exchange rate objectives of central bank. The model is used to analyse the impact of Japanese FX interventions during the period 1999 -2011 on the Yen/US dollar dynamics.
    Original languageEnglish
    PublisherUniversity of Dundee
    Number of pages28
    Publication statusPublished - Oct 2011

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.260
    ISSN (Print)1473-236X

    Keywords

    • Exchange rates
    • Interventions
    • Japan

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