Measuring Exchange Market Pressure and Intervention in Interdependent Economies

Download or read book Measuring Exchange Market Pressure and Intervention in Interdependent Economies written by Diana N. Weymark and published by . This book was released on 1998 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this article, operational exchange market pressure and intervention indices are derived for a world composed of two interdependent economies. The model-consistent formulae, which can be calculated from observed data, are obtained by applying general definitions of exchange market pressure and intervention activity to a two-country rational-expectations model. It is demonstrated that the functional forms used to measure exchange market pressure and intervention activity depend on whether intervention is direct or indirect and also on whether foreign exchange reserves are held as currency or in the form of bonds.