Search Results
Journal Article
Exchange rates, adjustment, and the J-curve
Working Paper
Monetary Policy 101: A Primer on the Fed's Changing Approach to Policy Implementation
The Federal Reserve conducts monetary policy in order to achieve its statutory mandate of maximum employment, stable prices, and moderate long-term interest rates as prescribed by the Congress and laid out in the Federal Reserve Act. For many years prior to the financial crisis, the FOMC set a target for the federal funds rate and achieved that target through purchases and sales of securities in the open market. In the aftermath of the financial crisis, with a superabundant level of reserve balances in the banking system having been created as a result of the Federal Reserve's large scale ...
Working Paper
The effect of multilateral trade clearinghouses on the demand for international reserves
This paper attempts to capture the portfolio incentives for central bank participation in a multilateral trade clearinghouse and to discuss the relation of those incentives to the volume of trade. Clearinghouses for the netting of multilateral intra-regional trade have existed since the 1950s, but no work to date has attempted to explore the incentive effects of such arrangements. Instead previous work, primarily empirical, has focused on the tendency of preferential arrangements (clearing as well as favorable protectionist policies) between nations to encourage trade flows between them. This ...
Working Paper
International Aspects of Central Banking : Diplomacy and Coordination
In this paper, we discuss the evolution of central bank interactions since the early 1970s following the breakdown of the managed exchange-rate system that was negotiated at Bretton Woods. We review the most important forums or organizations through which central banks have engaged in diplomacy. We then discuss the mobilization of coordination through diplomacy using three examples over the past 30 years: the Plaza Accord in 1985 negotiated by the G-5; the response to the Asian financial crisis in 1997-98, led by the International Monetary Fund (IMF) with heavy participation from G-7 finance ...
Working Paper
Using external sustainability to forecast the dollar
The sizable run-up in U.S. external debt over the 1980s has prompted many to ask whether continued current account deficits of the magnitude witnessed can be sustained. In several recent papers, different authors have concluded that a given path of the dollar is unsustainable. The conclusion drawn in these earlier papers does not allow for the substantial uncertainty that surrounds this issue, however. There is uncertainty about the estimated model of the U.S. current account that is used to generate the net demand for foreign assets for a given path of the dollar, about the preferences of ...
Conference Paper
Monetary integration in East Asia
Discussion Paper
Using Generative AI Models to Understand FOMC Monetary Policy Discussions
In an era increasingly shaped by artificial intelligence (AI), the public’s understanding of economic policy may be filtered through the lens of generative AI models (also called large language models or LLMs). Generative AI models offer the promise of quickly ingesting and interpreting large amounts of textual information.