This paper explores the remarkable roles of exchange rates when a cryptocurrency is adopted and commonly used as another type of foreign currency in the international economy. First, in order to examine its movement, we describe the price of a cryptocurrency as the relative price in terms of a...

Understanding gross capital flows is increasingly viewed as crucial for both macroeconomic and financial stability policies, but theory is lagging behind many key policy debates. We fill this gap by developing a two-country DSGE model that tracks domestic and cross-border gross positions between...