An argument that for countries with well-developed money markets and flexible exchange rates, there is little to be gained from holding a vast foreign exchange portfolio and intervening in the world's currency markets.

An examination of the developing-country debt problem, considering both the difficulty of obtaining and servicing foreign loans and the resource adjustments associated with consumption, investment, and trade patterns.

An examination of the connections between monetary policy changes, shifts in aggregate spending, and adjustments to production, showing that although a central bank may periodically exploit the connection between short-term monetary expansions and real economic growth, frequent attempts may...

A nontechnical guide to exchange rates that discusses the role of inflation and monetary policy in determining exchange rate movements, uses balance-of-payments concepts to illustrate the economic role of the real exchange rate, and examines the crucial role of expectations.

The United States has run a current account deficit for the past 20 years, and, as a consequence, foreigners now hold unprecedented financial claims on the United States. At some point, foreigners will become reluctant to hold these claims and will set into motion a series of corrective economic...

Recently, the U.S. Treasury announced a new, temporary insurance program for U.S. money-market mutual funds. To guarantee payment of these funds’ liabilities, the Treasury will use the assets of its Exchange Stabilization Fund. Created in the 1930s to stabilize the exchange value of the...

Many people mistakenly believe that a sharp rise in the price of energy is necessarily inflationary. They fail to understand that energy prices adjust with the demand and supply of energy, whereas inflation responds to the demand and supply of money. This Economic Commentary explains that the...

An examination of proposals to improve the international monetary system by creating central exchange rates and a discussion of why such a policy might not be in the best interest of the United States.

An analysis of exchange-rate patterns and a discussion of factors thought to influence the strength of the dollar in the foreign exchange market.

When short-term interest rates hover near zero, central banks may have difficulty offsetting downward momentum on prices and economic activity through traditional monetary-policy channels, since commercial banks have little incentive to make loans. Economists refer to this situation as a...