The threat of deflation combined with the zero lower bound on interest rates has recently been intensely debated in economics. The consequences of a deflationary recession are manifold and severe as the Japanese example demonstrates. In this paper, we focus on the potential connections between...

We use the foreign exchange forecasts of the Wall Street Journal poll to analyze forecasters' expectation formation process for the yen against the US dollar for the period 1989-2007. We also contrast the expectation formation process with the actual exchange rate process. We find that most...

This paper estimates reaction functions for the Federal Reserve and the Deutsche Bundesbank in the dollar-deutschmark market for the period 1979 - 1995 for which empirical studies have so far focused on Federal Reserve interventions. Applying a Logit model we examine whether the intervention...

Confronted with a significant devaluation pressure on the euro, the European Central Bank (ECB) tried in the fall of 2000 to influence the dynamics of the euro through foreign exchange market interventions. In this paper, we analyze the effectiveness of the intervention policy of the ECB. To...

In this paper, we use a structural vector autoregression model to identify and compare demand and supply shocks between euro area countries and central and eastern European countries (CEECs). The shocks and the shock adjustment dynamics of these countries are also compared to EU countries that...