Citation

Discussion Paper Details

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Title: A Critical Appraisal of Recent Developments in the Analysis of Foreign Exchange Intervention

Author(s): Paolo Vitale

Publication Date: June 2006

Keyword(s): exchange rate dynamics, foreign exchange micro structure and official intervention

Programme Area(s): International Macroeconomics

Abstract: We offer a critical review of recent developments in the study of foreign exchange intervention. In particular, we discuss some unresolved issues, such as the secrecy puzzle, the relevance of the signalling and portfolio-balance effect hypotheses, the identification of the impact of foreign exchange intervention on currency values. We suggest that: i) the unresolved nature of these issues is partly due to the absence of a market microstructure perspective in most of the existing analysis of foreign exchange intervention; and ii) that recent promising advances in this strand of research have not fully exploited the potential of such perspective.

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Bibliographic Reference

Vitale, P. 2006. 'A Critical Appraisal of Recent Developments in the Analysis of Foreign Exchange Intervention'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5729