This paper investigates the Purchasing Power Parity Theory (PPP) in the context of possible nonlinear relationships between prices and exchange rates of three key currencies. The main contribution of this paper is testing for nonlinearities and nonlinear relationships in a framework of...

This paper investigates the role of central bank intervention in currency markets. Specifically, the bilateral exchange rates of the dollar versus the British pound, Swiss franc, and the yen are examined. Central banks conduct open market operations in order to regulate exchange rates in...