Journal Article

Does intervention explain the forward discount puzzle?


Abstract: An investigation of the impact of U.S. and German central-bank interventions on the forward discount puzzle for two exchange rates-the German mark/U.S. dollar and the Japanese yen/U.S. dollar-using official 1985-91 data. The evidence on the importance of intervention is strongest for the DM/$. However, the direction of the impact is inconsistent with the findings of Flood and Rose (1996) if periods of intervention are viewed as equivalent to fixed-rate regimes.

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Review

Publication Date: 1997

Issue: Q IV

Pages: 24-31