Confronted with a significant devaluation pressure on the euro, the European Central Bank (ECB) tried in the fall of 2000 to influence the dynamics of the euro through foreign exchange market interventions. In this paper, we analyze the effectiveness of the intervention policy of the ECB. To...

This paper uses a dynamic general equilibrium two-country optimizing model to analyse the consequences of international capital mobility for macroeconomic volatility. To this end, the dynamic macroeconomic effects of a monetary policy, a fiscal policy, and a labor supply shock are analysed....