Suchergebnisse

AbstractThe Federal Reserve has intervened in foreign exchange markets since 1962 as a partner of the Treasury's Exchange Stabilization Fund. Departing from its scripted passive role under the Bretton Woods system, the US defense of the dollar under pegged exchange rates may not appear unreasonable. Why the practice continues under a floating rate system is harder to understand. By accumulating large foreign currency balances since 1987, the US has made intervention easier. Holding larger balances does not help the authorities know what exchange rates ought to be. The US for a few years in the 1980s refrained from intervening. It can happen again if its authorities acknowledge that intervening is an exercise in futility.

How should the Federal Reserve conduct monetary policy for stable growth and low inflation? Professor Anna Schwartz of the National Bureau of Economic Research in New York, argues that the American central bank should steadily reduce the rate of monetary growth.

Will the Crash of 1987 be followed by a deep depression like the crash of 1929?Professor Anna Schwartz, who collaborated with Professor Milton Friedman in writing'The Monetary History of the United States', argues that the 1987 crash will only be followed by a severe recession if the Federal Reserve allows a collapse of the money supply as it did in the early 1930s.

Cost‐benefit reasons account for the adoption of the pre‐World War I gold standard and the Bretton Woods system–the closest approximations to a constitution for the international monetary system that the world has experienced. Past rule‐based international monetary proposals that were rejected were judged not to serve national interests. Current proposals do not deal with policymakers' and governments' self‐interest in preserving their existing power to choose domestic objectives and to adopt policies to achieve those objectives.