Tantrums and hot money: How does Fed policy affect global financial stability?

This is the second of three posts based on my recent Mundell-Fleming lecture at the International Monetary Fund (see here for a video of the lecture and here for a paper that elaborates on the lecture’s themes). In the first post of the series , I challenged the claim that in recent years the U.S. (via the Fed) has waged a “currency war,” seeking competitive advantage in trade by easing monetary policy and thereby weakening the foreign exchange value of the dollar.  In this post I address a more subtle criticism of U.S. monetary policy: that changes in......(read more)

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