Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
964416 | Journal of International Money and Finance | 2008 | 23 Pages |
Abstract
This paper examines the welfare implications of foreign exchange intervention in a two-country, two-currency, general equilibrium model with limited participation in financial markets and cash-in-advance constraints on transactions. Both sterilized and nonsterilized intervention operations have significant impacts on the allocation of liquidity in international financial markets and therefore affect real economic activities. The welfare effects of shocks to monetary policy, sterilized and nonsterilized foreign exchange interventions are examined and compared. The design of welfare-maximizing intervention policy rules is also discussed.
Keywords
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Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Wai-Ming Ho,