Macroeconomic Interdependence and the International Role of the Dollar

Linda Goldberg and Cédric Tille

No 13820, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The U.S. dollar holds a dominant place in the invoicing of international trade, along two complementary dimensions. First, most U.S. exports and imports invoiced in dollars. Second, trade flows that do not involve the United States are also substantially invoiced in dollars, an aspect that has received relatively little attention. Using a simple center-periphery model, we show that the second dimension magnifies the exposure of periphery countries to the center's monetary policy, even when direct trade flows between the center and the periphery are limited. When intra-periphery trade volumes are sensitive to the center's monetary policy, the model predicts substantial welfare gains from coordinated monetary policy. Our model also shows that even though exchange rate movements are not fully efficient, flexible exchange rates are a central component of optimal policy.

JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-cba, nep-int, nep-mac, nep-mon and nep-opm
Note: IFM ITI ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published as Goldberg, Linda & Tille, Cédric, 2009. "Macroeconomic interdependence and the international role of the dollar," Journal of Monetary Economics, Elsevier, vol. 56(7), pages 990-1003, October.

Downloads: (external link)
http://www.nber.org/papers/w13820.pdf (application/pdf)

Related works:
Journal Article: Macroeconomic interdependence and the international role of the dollar (2009)
Working Paper: Macroeconomic Interdependence and the International Role of the Dollar (2008)
Working Paper: Macroeconomic interdependence and the international role of the dollar (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:13820

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w13820

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().