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On the rotation of the earth, drunken sailors, and exchange rate policy

Author

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  • Owen F. Humpage

Abstract

A growing number of observers seem to believe that official foreign exchange intervention offers a useful tool for managing the dollar?s descent. In particular situations, official transactions can sometimes produce temporary changes in exchange rates, but intervention does not permit countries to avoid or substantially modify trends in the movements of their exchange rates. At best, intervention is of very limited value.

Suggested Citation

  • Owen F. Humpage, 2004. "On the rotation of the earth, drunken sailors, and exchange rate policy," Economic Commentary, Federal Reserve Bank of Cleveland, issue Feb.
    • Handle: RePEc:fip:fedcec:y:2004:i:feb15
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    Citations

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    Cited by:

    1. Christopher J. Neely, 2005. "The case for foreign exchange intervention: the government as an active reserve manager," Working Papers 2004-031, Federal Reserve Bank of St. Louis.
    2. David Altig, 2005. "Whose afraid of a renminbi float?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(3), pages 22-28, October.

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