The consensus is that currency intervention is expensive and it doesn’t work — they might want to rethink the second part.
A new paper by former senior U.S. Federal Reserve economist Joseph Gagnon says currency intervention has an impact on other economies several times larger than originally thought, as reported in the WSJ.
Gagnon’s paper argues that for every dollar a country spends to lower the value of a its currency, it boosts the trade balance by between 60 cents to a dollar.
The report could pressure the IMF and non-manipulators to act more forcefully to protect the integrity of trade.