Does foreign exchange intervention work?

Does foreign exchange intervention work?

Recent Books in Macroeconomics* The Age of Diminished Expectations. Paul Krugman. Cambridge, MA: The MIT Press, 1994. 239 pp. $12.95. ISBN 0-262-61092...

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Recent Books in Macroeconomics* The Age of Diminished Expectations. Paul Krugman. Cambridge, MA: The MIT Press, 1994. 239 pp. $12.95. ISBN 0-262-61092-2. In this revised and updated edition of his 1990 book, Krugman attempts to describe the state of today's economy using language the nonprofessional reader can understand. As in the 1990 edition, he examines a wide range of issues, including income inequality, unemployment, monetary policy, the budget deficit, protectionism and Japan, and Third World debt. In his new introduction, Krugman associates George Bush's failure to win re-election with the voters' "simmering dismay" over a long-term economic slowdown. Other added features include a chapter on international finance, which deals mostly with European monetary affairs, and a chapter on health care, which focuses on ever-increasing health care costs and on managed competition and alternative systems. Paul Krugman is Professor of Economics at MIT.

Analytical Methods" of Economics. Akira Takayama. Ann Arbor, MI: The University of Michigan Press, 1993. 672 pp, $24.95. ISBN 0-472-08135-7. Analytical Methods in Economics is an introduction to the basic mathematical elements used in the analytical approach to economics. The book starts with an examination of mathematical tools necessary for analyzing economic problems. It continues with sections on nonlinear programming as it is applied to economics, the economics of uncertainty, elements of differential equations and economic applications, and optimal control theory and applications to economic theory. As the book instructs the reader on methods of analysis it stresses consideration of motivation, explanation and economic illustrations. Akira Takayama is Vandeveer Professor of Economics at Southern Illinois University.

Does Foreign Exchange Intervention Work? Kathryn M. Dominguez and Jeffrey A. Frankel. Washington, D.C., Institute for International Economics, 1993. 192 pp. $18.00 ISBN 0-88132-104-4. The results of this study show that, contrary to the findings of many analysts, central bank intervention does have an effect on exchange rates, and that, when the intervention is made known to the public, the effect is made greater. Dominguez and Frankel use previously unavailable data on daily intervention from the Federal Reserve and the Bundesbank to show that even "sterilized" intervention, that is, intervention that does not involve a change in the domestic monetary base, has a significant effect. Topics include a history of intervention since 1973, effectiveness of a free-floating system, *PleasementiontheJournalofMacroeconomics,Winter1995,Vol.17, No. 1,whenordering from publishers. 173

Recent Books intervention policy issues, assessing intervention's effectiveness and intervention in the 1980s.

Economic Growth and Business Cycles. Paolo Sylos Labini. Brookfield, VT: Edward Elgar Publishing Company, 1993. 237 pp. NPA ISBN 1-85278833-X. This book, a volume in the series Economists of the Twentieth Century, gives a nontraditional analysis of growth: instead of simply seeking the equilibrium values of prices, income, employment and production, it attempts to find the reasons for the movement of these quantities over time. Using analytical techniques related to those of Adam Smith, David Ricardo, Schumpeter, Sraffa, Kalecki and Keynes, the book shows that economic growth should be seen not just as an increase in out-put, but as a process of change that affects employment, the market, output, income distribution and the system of prices. Paolo Sylos Labini is Professor of Economics at the University "La Sapienza," Rome, Italy. Exploring the Black Box. Nathan Rosenberg. New York, NY: Cambridge University Press, 1994. 274 pp. $54.95. ISBN 0-521-45270-8. In this book Rosenburg reveals that the economic significance of technological change can be determined only when the often complex, "paths" that lead to technological improvements are considered. As with his earlier work, Inside the Black Box, the title refers to that place "into which technological change has been consigned by economists." Rosenburg cites the failure to recognize the diversity of technological change as the reason many propositions for particular industries fail. The book has three parts. Part I is "Dealing with an Uncertain Future"; Part II is "Technology in Context"; Part III is "Sectoral Studies in Technological Change." The Handbook of International Economics. Frederick van der Ploeg. Cambridge, MA: Blackwell Publishers, 1994. 590 pp. $32.95. ISBN 0-63119062-7. This survey of recent work in international macroeconomics features essays by twenty-one contributors. The work concentrates on the progress in the area of international monetary economics over the last seven years. The book is divided into five parts: "Microfoundations of International Monetary Economics"; "Capital Taxation and Real Models"; "International Monetary Regimes"; "Capital Markets, Money and Exchange Rates"; and "Debt, Deficits and Growth." Frederick van der Ploeg is Professor of Political Economy at the University of Amsterdam, director of the Tinbergen Institute and a Fellow of the CEPR. 174