Is Central Bank Intervention Effective Under Inflation Targeting Regimes? The Case of Colombia

Two Targets, Two Instruments: Monetary and Exchange Rate Policies in Emerging Market Economies

“…The effectiveness of sterilized intervention is also likely to depend upon the circumstances. Kamil (2008) finds that interventions were effective in affecting the exchange rate in Colombia when done during a period of monetary easing (although the quantitative effects were small and short-lived), but not during a period of overheating and monetary tightening. Stone, Walker and Yosuke (2009) show that sterilized intervention in Brazil in the immediate aftermath of the global financial crises helped stabilize market expectations of exchange rate volatility.…”

Modeling Sterilized Interventions and Balance Sheet Effects of Monetary Policy in a New-Keynesian Framework

“…More recent studies have began to look at emerging markets. Papers such as Domac and Mendoza ( 2004) (Mexico and Turkey), Guimaraes and Karacadag (2004) (Mexico), Gersl and Holub (2006) (Czech Republic), Egert (2007) (several central and Eastern European countries), Kamil (2008) (Colombia), find some evidence that sterilized interventions affect the level of the exchange rate; others e.g. Tuna (2011) Turkey) find negative results.…”

Unveiling the Effects of Foreign Exchange Intervention: A Panel Approach

“…3 A number of studies have explored the effects of FXI on exchange rate volatility and obtained more conclusive results than those focused on exchange rate levels. See for example, Stone et al (2009), Mandeng (2003), Kamil (2008), Pattanaik and Sahoo (2003), Domaç and Mendoza (2004), Guimarães Filho and Karacadag (2004), Abenoja (2003). Another related strand of the literature has studied the impact of FXI (and more generally net official flows) on the current account.…”