Jin, Hailong; Choi, E. Kwan - In: International Review of Economics & Finance 27 (2013) C, pp. 14-20
This paper investigates the possible gains from currency intervention by central banks using a two-period framework in which a trade surplus in one period must be offset by a trade deficit in the next period. It is shown that when the interest rate is zero, the optimal policy is nonintervention....