Because their prices incorporate market expectations for the future, they are also an area in which policy indicators might be found. The huge literature on speculative attacks in exchange markets started with Dale’s work with Steve Salant on gold.
It significantly influenced the thinking of an intern at the Board, one P. Krugman, who, in his pre-political mode, extended the thinking to foreign exchange crises. Dale’s understanding of exchange markets intersected with his understanding of macroeconomics and policy in a number of studies that have tried to inject sense and analysis into discussions of sterilized interventions.