TY  - JOUR
AU  - Turnovsky,Stephen J.
TI  - Exchange Market Intervention Under Alternative Forms of Exogenous Disturbances
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1289
PY  - 1985
Y2  - April 1985
UR  - http://www.nber.org/papers/w1289
L1  - http://www.nber.org/papers/w1289.pdf
N1  - Author contact info:
Stephen Turnovsky
Department of Economics
301 Savery Hall; Mail Stop DK 30
University of Washington
Seattle, WA   98195
Tel: 206-545-8028
E-Mail: sturn@u.washington.edu
AB  - This paper analyzes exchange market intervention in a stochastic model of a small open economy. The distinction is made between disturbances which are unanticipated and anticipated on the one hand, and those that are perceived as being transitory or permanent, on the other. The paper demonstrates how the appropriate form of exchange market intervention is sensitive to these aspects of the disturbances. Of particular interest is the case of an unanticipated permanent disturbance, when output may be stabilized perfectly about its frictionless level by the use of a very simple class of intervention rules.The optimal rules in other cases are also discussed.
ER  -