During the recent era, many emerging market economies have implemented unconventional policy measures to mitigate the effect of large swings in short-term capital flows on domestic business cycles. This paper focuses on a specific unconventional policy tool introduced by the Central Bank of...

The purpose of this study is to shed light over the management of foreign reserves that have contradictory policy intentions and impacts; (1) to defend the domestic currency (2) to depreciate the domestic currency. With this Möbius's strip-like nature in mind, we extend the Dornbusch (1976)...

This paper studies the fluctuations of foreign exchange reserves under a regime of credibly fixed exchange rates. The paper considers a variety of assumptions on the determinants of money demand and currency substitution