Exchange rates intervention and capital mobility control. Comparisons and simultaneous optimization

Yun peng Chu, Ching chong Lai, Wen tzong Hsiao, Wen ya Chang

Research output: Contribution to journalArticle

Abstract

When the policy of optimal intervention in the foreign exchange market and that of optimal control of capital mobility are considered individually, their relative effectiveness in stabilizing the economy cannot be determined a priori. When they are jointly considered, the best combination is (i) zero capital mobility and fixed exchange rate, when only expenditure disturbances occur, (ii) flexible exchange rate and an arbitrary degree of mobility control, when only trade disturbances occur, or (iii) fine-tuning intervention accompanied by completely free or zero capital mobility, depending on the given situations, when both types of disturbances are present.

Original languageEnglish
Pages (from-to)119-134
Number of pages16
JournalJournal of Development Economics
Volume23
Issue number1
DOIs
Publication statusPublished - 1986
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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