The effectiveness of central bank intervention through the noise trading channel: Evidence from the Reserve Bank of Australia

This paper attempts to shed light on the effectiveness of central bank intervention through the noise trading channel. This channel suggests that central banks should intervene in highly volatile market periods and keep their interventions secret. The following paper is an empirical study carried out on behalf the Reserve Bank of Australia. This investigation concerns the period extended from December 12, 1983 to April 30, 2008. Our findings support the noise trading channel and therefore secret intervention.