NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can Foreign Exchange Intervention Stem Exchange Rate Pressures from Global Capital Flow Shocks?

Olivier Blanchard, Gustavo Adler, Irineu de Carvalho Filho

NBER Working Paper No. 21427
Issued in July 2015
NBER Program(s):   EFG   IFM

Many emerging market economies have relied on foreign exchange intervention (FXI) in response to gross capital inflows. In this paper, we study whether FXI has been an effective tool to dampen the effects of these inflows on the exchange rate. To deal with endogeneity issues, we look at the response of different countries to plausibly exogenous gross inflows, and explore the cross country variation of FXI and exchange rate responses. Consistent with the portfolio balance channel, we find that larger FXI leads to less exchange rate appreciation in response to gross inflows.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21427

Users who downloaded this paper also downloaded* these:
Blanchard, Erceg, and Lindé w21426 Jump Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery?
Edwards w20893 Monetary Policy Independence under Flexible Exchange Rates: An Illusion?
Devereux, Tomlin, and Dong w21413 Exchange Rate Pass-Through, Currency of Invoicing and Market Share
Engel w21042 Exchange Rates, Interest Rates, and the Risk Premium
Galí w21430 Hysteresis and the European Unemployment Problem Revisited
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us