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Wilfrid Laurier University School of Business & Economics
November 22, 2014

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School of Business & Economics

2006-11 EC: Measuring the Impact of Intervention on Exchange Market Pressure (working paper)


P. Siklos & D. Waymark

published: 2006 | Research publication | Working Paper - Economics

ABSTRACT: We introduce an index of ex ante exchange market pressure (EMP) that can be usedas a benchmark against which to measure the effectiveness of sterilized intervention. Ex ante EMP is the change in the exchange rate that would be observed if the authorities refrain from intervening and agents correctly anticipate this outcome. Ex post EMP measuresexchange market pressure under the policy actually implemented. We use a ratio of these two EMP measures to assess the effectiveness of sterilized intervention in Canada and Australia, and find that its effects persist even in quarterly data.

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revised Mar 6/07

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