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Implicit bands in the Yen/Dollar exchange rate

[journal article]

Ledesma-Rodríguez, Francisco; Navarro-Ibáñez, Manuel; Pérez-Rodríguez, Jorge; Sosvilla-Rivero, Simon

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Abstract This paper attempts to identify implicit exchange rate regimes for the Yen/Dollar exchange rate. To that end, we apply a sequential procedure that considers both the dynamics of exchange rates and central bank interventions to data covering the period from 1971 to 2003. Our results suggest that implicit bands existed in two subperiods: April-December 1980 and March-October 1987, the latter coinciding with the Louvre Accord. Furthermore, the study of the credibility of such implicit bands indicates the high degree of confidence attributed by economic agents to the evolution of the Yen/Dollar exchange rate within the detected implicit band rate, thus lending further support to the relevance of such implicit bands.
Keywords rate of exchange; Japan; United States of America
Classification Political Economy; Economic Policy
Free Keywords exchange rate regimes; implicit fluctuation bands; exchange rates; Wechselkurspolitik; Yen; US-Dollar
Document language English
Publication Year 2009
Page/Pages 31 p.
Journal Applied Economics (2009)
DOI http://dx.doi.org/10.1080/00036840802600384
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)