Journal article
The advantage of showing your hand selectively in foreign exchange interventions
European Journal of Political Economy, v 23(1)
2007
Abstract
This paper studies the effectiveness of foreign exchange rate targeting by a central bank in a market microstructure framework. Unlike the existing literature, where the intervening central bank either makes its target exchange rate public or hides it completely, we present a model that emphasizes the value of selectively disclosing intervention relevant information to some but not all market participants. We show that if the market's uncertainty over the central bank's target is sufficiently high and if the central bank is targeting the exchange rate away from its fundamental value (attempting to move the exchange rate in the opposite direction of where the fundamental based trade takes it) selectively disclosing the exchange rate target improves the effectiveness of the intervention.
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3 citations in Scopus
Details
- Title
- The advantage of showing your hand selectively in foreign exchange interventions
- Creators
- Richard C Barnett - Department of Economics, Villanova University, Villanova School of Business, 3008 Bartley Hall, Villanova, PA 19085, USASaltuk Ozerturk - Department of Economics, Southern Methodist University, Dallas, TX 75275–0496, USA
- Publication Details
- European Journal of Political Economy, v 23(1)
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Scopus ID
- 2-s2.0-33846902381
- Other Identifier
- 991014878461704721