The profitability of US intervention in the foreign exchange markets

Article Abstract:

US intervention in foreign exchange markets is studied to show that intervention from the beginning of generalized floating in 1973 yielded profits for US monetary authorities. The study uses an intervention profit model, wherein profitability measured as of day T depends on the how intervention operations predict the ex post deviation from interest parity. It is shown that intervention earned the US about $16.5 billion by the end of 1992.

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Learning and the exchange rate: exchange rate responses to money announcements in the early 1980s

Article Abstract:

A monetary model of exchange rate determination with transitory monetary shocks and Bayesian learning is presented. The model shows that exchange rate responses to monetary announcements are time-varying and asymmetric. The negative correlation of the two variables also increases as beliefs converge. Evidence indicates the presence of learning behavior during the Oct. 1979 to Oct. 1982 period in the German mark and Japanese yen equations.

Prices and rates, Foreign exchange, Foreign exchange rates, Learning

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The impact of US economic variables on Bank of Canada policy: direct and indirect responses

Article Abstract:

A study was conducted to determine whether US economic variables directly or indirectly influenced the policy decision making of the Bank of Canada. The framework used was a modified reaction function approach which allows analysis of direct and indirect US effects on Canadian monetary policy. The results indicate that Canadian monetary policy is affected both directly and indirectly by US economic variables.

Canada, International economic relations

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