U.S. Monetary-Policy Evolution and U.S. Intervention

13 Pages Posted: 28 Oct 2011

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Owen Humpage

Federal Reserve Bank of Cleveland

Anna J. Schwartz

City University of New York (CUNY); National Bureau of Economic Research (NBER) - NY Office

Date Written: October 27, 2011

Abstract

The United States all but abandoned its foreign-exchange-market intervention operations in late 1995, when they proved corrosive to the credibility of the Federal Reserve’s commitment to price stability. We view this decision as the culmination of the evolution of U.S. monetary policy over the past century from a gold standard to a fiat money regime. The abandonment of intervention was necessary to secure monetary policy credibility.

Keywords: Trilemma, central-bank independence, intervention, monetary policy, swap lines, warehousing

JEL Classification: F3, N1, N2

Suggested Citation

Bordo, Michael D. and Humpage, Owen and Schwartz, Anna J., U.S. Monetary-Policy Evolution and U.S. Intervention (October 27, 2011). FRB of Cleveland Working Paper No. 11-27. Available at SSRN: https://ssrn.com/abstract=1950308 or http://dx.doi.org/10.2139/ssrn.1950308

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Owen Humpage (Contact Author)

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101-1387
United States

Anna J. Schwartz

City University of New York (CUNY) ( email )

17 Lexington Avenue
New York, NY 10010
United States

National Bureau of Economic Research (NBER) - NY Office

365 Fifth Avenue, 5th Floor
New York, NY 10016-4309
United States
212-817-7957 (Phone)

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