@techreport{Schmidt2004Sterilized,
abstract = {Sterilized foreign exchange market interventions are commonly dismissed by economists as an ineffective
policy instrument. Nevertheless many central banks operating under independently floating exchange
rates regimes are often engaged in sales and purchases of foreign exchange in order to manipulate the
current value of their currencies. In this paper we argue that the skepticism of many economists can be
ascribed to their orientation on fundamental-based, efficient-market exchange rate models. Given their
weak empirical support, however, it is unreasonable to evaluate the effectiveness of sterilized foreign
exchange interventions against the background of this class of models. Therefore, the purpose of this
paper is to investigate the effectiveness of sterilized foreign exchange market interventions on the basis of
a more suitable model. Using a chartist-fundamentalist model we show that central banks can influence
exchange rates by using sterilized interventions. In particular, turning points occur earlier and exchange
rate misalignments are substantially reduced.},
author = {Robert Schmidt and Timo Wollmersh\"{a}user},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {F31; D84; E58; 330; Foreign exchange; central bank intervention; heterogeneous expectation; Wechselkurspolitik; Wechselkurstheorie; Anlageverhalten; Erwartungstheorie; Wertpapieranalyse; Theorie},
language = {eng},
number = {50},
title = {Sterilized Foreign Exchange Market Interventions in a Chartist-Fundamentalist Exchange Rate Model},
type = {W\"{u}rzburg economic papers},
url = {http://hdl.handle.net/10419/22343},
year = {2004}
}
