Our research investigated whether foreign exchange intervention volume matters for the exchange rate effects of intervention. It employed daily data on Japanese interventions from April 1991 to December 2011 and time-series estimations, non-temporal threshold analysis, as well as binary choice models. We found that intervention volume matters for the effects of intervention, but only to the extent that the exchange rate effect per intervention unit is magnified in a linear sense by the larger intervention amount. This is a policy-relevant finding that also adds to our understanding of how intervention works.

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