Announcements are not enough : foreign exchange intervention under imperfect credibility

Borradores de Economia
Número: 
949
Publicado: 
Clasificación JEL: 
F31, E58, G20, D43
Palabras clave: 
Exchange Rate, Foreign Exchange Intervention, Central Bank Credibility, Credibility Function

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Central banks in emerging countries frequently build-up (diminish) reserves while attempting to depreciate (appreciate) their domestic currencies. Even if these interventions are e¤ective, they often entail various costs. Basu (2012), nonetheless, propose