During 2006, there were significant changes in the exchange rate of Euro/US dollar (from US $ 0.84 per Euro in early 2006 to US $ 0.78 per Euro by September 2006), yet there has been little significant impact in US Euro trade patterns. In view of this, the efficacy of the exchange rate as an equilibrating mechanism needs to be investigated.
1 Of course, such models cannot differentiate between different policy instruments. But the effects of policy  tightening or easing should, in principle, have similar effects on asset prices across the central bank’s toolkit. 2 See Cœuré, B. (2018), “The persistence and signalling power of central bank asset purchase programmes”,  speech at the 2018 US Monetary Policy Forum, New York City, 23 February.