Estimating the Degree of Interventionist Policies in the Run-Up to EMU

26 Pages Posted: 11 Mar 2008 Last revised: 19 Sep 2008

See all articles by David Sondermann

David Sondermann

European Central Bank (ECB)

Mark M. Trede

University of Muenster - Faculty of Economics

Bernd Wilfling

Westfälische Wilhelms-Universität

Date Written: September 9, 2008

Abstract

Based on a theoretical monetary exchange-rate model in continuous time this paper establishes a sequential estimation framework which is capable of indicating central bank intervention in the run-up to a currency union. Using daily pre-EMU exchange-rate data for the countries of the current euro zone, we find mixed evidence of active pre-EMU intervention policies (so-called institutional frontloading strategies). Our estimation framework is highly relevant to economic and political agents operating in financial markets of the upcoming EMU accession countries.

Keywords: C13, C22, F31, F33

JEL Classification: Exchange rates, EMU, institutional frontloading

Suggested Citation

Sondermann, David and Trede, Mark M. and Wilfling, Bernd, Estimating the Degree of Interventionist Policies in the Run-Up to EMU (September 9, 2008). Applied Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1103561 or http://dx.doi.org/10.2139/ssrn.1103561

David Sondermann

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Mark M. Trede

University of Muenster - Faculty of Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

Bernd Wilfling (Contact Author)

Westfälische Wilhelms-Universität ( email )

Professur für Empirische Wirtschaftsforschung
Am Stadtgraben 9
Münster, 48143
Germany
+49 - 251 - 83 25040 (Phone)
+49 - 251 - 83 25042 (Fax)

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