The role of intervention policies in the foreign exchange market in the process of business cycles in the United States
The purposes of this thesis are twofold. The first is to investigate U.S. intervention policies in foreign exchange markets and their contribution to the process of business cycles through a dynamic equilibrium real business cycle model. The second is to evaluate the effectiveness of monetary aggregates in an open economy. It has been found, with respect to the first objective, that the successful intervention policy, in terms of a lower degree of real economic activity volatility, is that policy which combines intervention with sterilization actions. Intervention policies that are not accompanied by sterilization policies tend to exacerbate the volatility of real economic activity. With respect to the second objective, several tests (Granger-causality, Error Correction Models, and VAR-decomposition) indicate that: monetary actions-attributed to intervention policies in the foreign exchange market- have a significant effect or real variables; the preceding argument is opposed to the majority of real business cycles papers that provide evidence that money does not matter.
Apergis, Nicholas, "The role of intervention policies in the foreign exchange market in the process of business cycles in the United States" (1992). ETD Collection for Fordham University. AAI9215345.