Devereux, Michael B.; Shi, Shouyong - University of Toronto, Department of Economics - 2008
, the US dollar is predominant in international trade and financial flows. The dollar acts as a `vehicle currency' in the … exchange. This paper constructs a dynamic general equilibrium model of a vehicle currency. We explore the nature of the … efficiency gains arising from a vehicle currency, and show how this depends on the total number of currencies in existence, the …