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In standard models of the balance of payments, crises occur when investors begin to doubt the credibility of the government's commitment to its exchange rate policy. In this paper, we develop an alternative model in which balance of payments crises occur even if the credibility of government...
Persistent link: https://www.econbiz.de/10014158695
U.S. paper dollar had become 'as good as gold.' These outcomes emerged from how the U.S. federal government financed …
Persistent link: https://www.econbiz.de/10013082431
convertibility. It also suggests a methodology for the interpretation of monetary behavior during historical periods of … inconvertibility. First we analyze the case of a government with a monopoly over currency issue. The government maximizes seignorage … revenue by generating an inflation, but the terminal condition of a return to convertibility implies that the price level must …
Persistent link: https://www.econbiz.de/10012763496
The case for monetary simplification and unification has been made since the middle of the nineteenth century. It rests on four principal arguments ;reduced transaction costs; establishing credibility; preventing bad policy in other states; political integration via money. In this paper we argue...
Persistent link: https://www.econbiz.de/10012767361
attempted to manage a successful common currency when sub-national political entities were allowed to have separate currencies … and run independent monetary policies. Congress created a common currency that was too large to use in ordinary … transactions. Congress hoped this currency would be held for post-war redemption and would not circulate as money during the war …
Persistent link: https://www.econbiz.de/10013011916
This paper provides an historical perspective on reserve currency competition and on the prospects of the dollar as an … international currency. It questions the conventional wisdom that competition for reserve-currency status is a winner-take-all game … position for the foreseeable future. Hopes that the yuan could become a major international currency 20 or even 40 years from …
Persistent link: https://www.econbiz.de/10013222319
It has been argued that Gresham's Law, bad money (money with a low value in non-monetary uses) drives out good, often fails because one money can circulate at its market value. Various cases involving the U.S. dollar in the nineteenth century have been cited as possible violations of the law...
Persistent link: https://www.econbiz.de/10013248440
This paper reconsiders the determinants of the exchange rate by studying the historical episode after the fall of the Iron Curtain. Testing a modified portfolio balance model, we attribute the strength of the deutschmark in the early nineties and the puzzling decline of the euro during its...
Persistent link: https://www.econbiz.de/10013230968
countries in the world moved to the gold standard following in the footsteps of Bismarck? The answer is no. By 1875 bimetallism … would have been unviable, and the US return to convertibility in 1879 would have made it impossible to sustain true …
Persistent link: https://www.econbiz.de/10013030135
instead to the structure of global portfolios and international financial markets. The literature on currency mismatches, in …
Persistent link: https://www.econbiz.de/10013225038