Implicit Bands in the Yen/Dollar Exchange Rate
Universidad de La Laguna Economic Working Paper No. 2004-02
28 Pages Posted: 7 Jan 2005
Date Written: September 2004
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 would suggest that implicit bands existed in two subperiods: April-December 1980 and March-December 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 the Yen/Dollar exchange rate within the detected implicit band rate, thus lending further support to the relevance of such implicit bands.
Keywords: Exchange rate regimes, Implicit fluctuation bands, exchange rates
JEL Classification: F31, F33
Suggested Citation: Suggested Citation