An essay contending that a central bank interested in maintaining price stability gains little from exchange-market intervention, particularly when it acts jointly with fiscal authorities.

This paper presents a two-country overlapping generations model in which financial intermediation arises endogenously as an incentive-compatible means of economizing on monitoring costs. Because of the existence of transactions costs, money markets in the two countries are segmented and...

We show that some classes of sterilized interventions have no effect on equilibrium prices and quantities. The proof does not require complete markets, Ricardian equivalence, monetary neutrality, or the law of one price. Moreover, regressions of exchange rates or interest differentials on...

An analysis of how central-bank exchange-market intervention can affect both the level of exchange rates and the risk premium in asset returns, showing how the risk premium is related to the conditional variances of intervention and other exogenous processes.

Early studies have shown that an exchange rate policy which attempts to stimulate exports through aggressive devaluations is often found to be inflationary. This study tests the validity of this hypothesis for the specific case of Indonesia. To analyze the possible inflationary consequence of...