Foreign Exchange Market Intervention: Market Microstructure Models and Empirical Investigations investigates the effectiveness of government intervention from the market microstructure perspective, especially focusing on its impact concerning the setting of bid-ask exchange rates (from the Plaza Agreement to the Louvre Accord). The authors test the effect of intervention on the dealers behavior in controlling his/her inventory to set the quotation of exchange rates. The authors also examine the relative importance of the inventory cost in three components of the bid-ask spread. Finally, they...