The relative effectiveness of sterilized and non sterilized foreign exchange market interventions
Pilbeam, K. 
ORCID: 0000-0002-5609-8620 (2005).
The relative effectiveness of sterilized and non sterilized foreign exchange market interventions.
Journal of Policy Modeling, 27(3),
pp. 375-383.
doi: 10.1016/j.jpolmod.2005.01.003
Abstract
This paper examines the impact of non sterilized and sterilized foreign exchange market operations on both the exchange rate and domestic interest rate within the context of a rational expectations portfolio balance model. The results show that non sterilized intervention will be more effective than sterilized intervention in affecting both the exchange rate and domestic interest rate. Both types of operations affect a market risk premium that is shown to be a function of relative asset supplies in the hands of the private sector. When domestic and foreign bonds are perfect substitutes, the risk premium vanishes and so to does the effectiveness of sterilized foreign exchange market interventions.
| Publication Type: | Article |
|---|---|
| Additional Information: | © Elsevier 2005. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/ |
| Publisher Keywords: | Exchange market intervention, Sterilized intervention, Non sterilized intervention |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| Departments: | School of Policy & Global Affairs > Economics |
| SWORD Depositor: |
Available under License Creative Commons Attribution Non-commercial No Derivatives.
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