FOREIGN EXCHANGE INTERVENTIONS UNDER INFLATION TARGETING: THE CZECH EXPERIENCE

This article discusses the role of foreign exchange interventions in the inflation‐targeting regime, focusing on the Czech experience since 1998. We find some evidence that the interventions had a statistically significant, but short lived and economically not very important, impact on the koruna�...

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Bibliographic Details
Published in:Contemporary economic policy 2006-10, Vol.24 (4), p.475-491
Main Authors: GERŠL, ADAM, HOLUB, TOMÁŠ
Format: Article
Language:English
Subjects:
Banking industry
Central banks
Czech Republic
Data analysis
Econometrics
Economic aspects
Economic growth
Effectiveness
Emerging markets
Fixed exchange rates
Floating exchange rates
Foreign exchange
Foreign exchange markets
Foreign exchange rates
GDP
Gross Domestic Product
Inflation
Inflation targeting
Interest rates
Intervention
Market economies
Monetary policy
Policy analysis
Prices and rates
Services
Studies
Volatility
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Summary:This article discusses the role of foreign exchange interventions in the inflation‐targeting regime, focusing on the Czech experience since 1998. We find some evidence that the interventions had a statistically significant, but short lived and economically not very important, impact on the koruna's exchange rate and its volatility. We also discuss consistency of the interventions with the inflation‐targeting framework. All the Czech intervention episodes are judged to be consistent with the inflation targets and output developments, but for two episodes not fully consistent regarding the mix of monetary conditions. (JEL E42, E44, E52, E58, E65, F31)
ISSN:1074-3529
1465-7287
DOI:10.1093/cep/byl015