Coordinated Central Bank Intervention
Response to the following problem:
Assume that the U.S. has a weak economy and that the Fed wants to correct this problem by adjusting the value of the dollar. The Fed is not worried about inflation. Assume that the eurozone has a somewhat similar economic situation as the U.S. and the European Central Bank (ECB) wants to correct this problem by adjusting the value of the euro. The ECB is not worried about inflation.
Do you think the European Central Bank and the Fed should engage in coordinated intervention in order to achieve their objectives? Briefly explain.