We study exchange rate dynamics under cooperative and self-oriented policies in a two-country DSGE modelwith unconventional monetary and exchange rate policies. The cooperative solution features a large exchangerate adjustment that cushions the impact of negative shocks and a moderate use of...

Many emerging market economies have relied on foreign exchange intervention (FXI) in response to gross capital inflows. In this paper, we study whether FXI has been an effective tool to dampen the effects of these inflows on the exchange rate. To deal with endogeneity issues, we look at the...