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Working Paper
U.S. foreign-exchange-market intervention during the Volcker-Greenspan era
The Federal Reserve abandoned foreign-exchange-market intervention because it conflicted with the System?s commitment to price stability. By the early 1980s, economists generally concluded that, absent a portfolio-balance channel, sterilized foreign-exchange-market intervention did not provide central banks with a mechanism for systematically influencing exchange rates independent of their monetary policies. If intervention were to have anything other than a fleeting, hit-or-miss effect on exchange rates, monetary policy had to support it. Exchange rates, however, often responded to U.S. ...
Working Paper
How effective is central bank forward guidance?
This paper investigates the effectiveness of forward guidance for the central banks of four countries: New Zealand, Norway, Sweden, and the United States. We test whether forward guidance improved market participants? ability to forecast future short-term and long-term rates. We find that forward guidance improved market participants? ability to forecast short-term rates over relatively short forecast horizons, but only for Norway and Sweden. Importantly, there is no evidence that forward guidance has increased the efficacy of monetary policy for New Zealand, the country with the longest ...
Speech
Central Banking and Its Discontents? Athenaeum of Philadelphia Philadelphia, PA
The value of the U.S. central bank's structure in strengthening local and national economies was underscored by Federal Reserve Bank of Philadelphia President Patrick T. Harker during a speech today at the Athenaeum of Philadelphia.
Working Paper
On the inherent instability of private money
Superseded by Working Paper 15-18. We show the existence of an inherent instability associated with a purely private monetary system due to the role of endogenous debt limits in the creation of private money. Because the bankers? ability to issue liabilities that circulate as a medium of exchange depends on beliefs about future credit conditions, there can be multiple equilibria. Some of these equilibria have undesirable properties: Self-fulfilling collapses of the banking system and persistent fluctuations in the aggregate supply of bank liabilities are possible. In response to this inherent ...