The profitability of U.S. intervention

Michael P. Leahy

No 343, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: In this paper I address some of the issues associated with measuring the profits and losses from intervention and show that U.S intervention since the beginning of generalized floating in 1973 has earned positive economic profits for the U.S. monetary authorities. Profitability has been largest during episodes of intervention that have generated large foreign-exchange exposures. Fundamental explanations for the profitability of intervention are difficult to isolate, but I discuss possibilities that are consistent with the data. Finally I consider the effects profitable intervention may have on macroeconomic activity through its effect on the government budget constraint.

Keywords: Foreign; exchange; -; Law; and; legislation (search for similar items in EconPapers)
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:343

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