Further Evidence on Implicit Bands in the Yen/Dollar Exchange Rate

FEDEA Working Paper No. 2006-19

29 Pages Posted: 6 Jul 2006

See all articles by Francisco Ledesma Rodríguez

Francisco Ledesma Rodríguez

University of La Laguna - Department of Applied Economics

Manuel Navarro Ibáñez

University of La Laguna - Department of Applied Economics

Jorge Pérez Rodríguez

University of Las Palmas de Gran Canaria - Faculty of Economic Science

Simon Sosvilla-Rivero

UCM Institute for Economic Analysis

Date Written: June 2006

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 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 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

Ledesma Rodríguez, Francisco J. and Navarro Ibáñez, Manuel and Pérez Rodríguez, Jorge and Sosvilla-Rivero, Simon, Further Evidence on Implicit Bands in the Yen/Dollar Exchange Rate (June 2006). Available at SSRN: https://ssrn.com/abstract=912624 or http://dx.doi.org/10.2139/ssrn.912624

Francisco J. Ledesma Rodríguez (Contact Author)

University of La Laguna - Department of Applied Economics ( email )

Facultad de Ciencias Economicas
Campus de Guajara
38071 La Laguna
Spain
+34 922 31 71 19 (Phone)
+34 922 31 78 53 (Fax)

Manuel Navarro Ibáñez

University of La Laguna - Department of Applied Economics ( email )

Facultad de Ciencias Economicas
Campus de Guajara
La Laguna, Santa Cruz de Tenerife 38071
Spain
+34 922 31 71 11 (Phone)

Jorge Pérez Rodríguez

University of Las Palmas de Gran Canaria - Faculty of Economic Science ( email )

Dpto. de Metodos Cuantitativo Campus de Tafira, Tafira Baja
E-35017 Las Palmas
Spain
+34 928 458222 (Phone)
+34 928-458225 / 1829 (Fax)

HOME PAGE: http://fcee.ulpgc.es/~jorge/

Simon Sosvilla-Rivero

UCM Institute for Economic Analysis ( email )

Carretera de Humera s/n
Madrid, Madrid 28223
Spain
+34913932626 (Phone)

HOME PAGE: http://www.ucm.es/info/ecocuan/ssr/

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