If official interventions convey private information useful for price discovery in foreign-exchange markets, then they should have value as a forecast of near-term exchange-rate movements. Using a set of standard criteria, we show that approximately 60 percent of all U.S. foreign-exchange...

The dollar's depreciation during the early floating rate period, 1973-1981, was a symptom of the Great Inflation. In that environment, sterilized foreign exchange interventions were ineffective in halting the dollar's decline, but they showed a limited ability to smooth dollar movements. Only...

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...

This chapter argues that the key deep underlying fundamental for the growing international imbalances leading to the collapse of the Bretton Woods System between 1971 and 1973 was rising US inflation since 1965. It was driven in turn by expansionary fiscal and monetary policies - the elephant in...