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The macroeconomic impact of foreign exchange intervention: An empirical study of Thailand

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  • Kubo, Akihiro

Abstract

This paper focuses on empirically investigating the efficacy of foreign exchange intervention in the Thai economy by simulation analyses. We find that foreign reserves are determinants of exchange rate dynamics, whereas the uncovered interest parity condition does not hold. We also find that foreign exchange intervention influences the inflation rate via the exchange rate, although by a lesser degree, whereas such an intervention for an extended period is likely to incur higher costs of the macro economy.

Suggested Citation

  • Kubo, Akihiro, 2017. "The macroeconomic impact of foreign exchange intervention: An empirical study of Thailand," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 243-254.
    • Handle: RePEc:eee:reveco:v:49:y:2017:i:c:p:243-254
    DOI: 10.1016/j.iref.2017.02.001
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    More about this item

    Keywords

    Foreign exchange intervention; Monetary policy; Small open economy model; Thailand;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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