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A Model of the International Monetary System

Emmanuel Farhi and Matteo Maggiori

Working Paper from Harvard University OpenScholar

Abstract: We propose a simple model of the international monetary system. We study the world supply and demand for reserve assets denominated in different currencies under a variety of scenarios: a Hegemon vs. a multipolar world; abundant vs. scarce reserve assets; a gold exchange standard vs. a floating rate system. We rationalize the Triffin dilemma, which posits the fundamental instability of the system, as well as the common prediction regarding the natural and beneficial emergence of a multipolar world, the Nurkse warning that a multipolar world is more unstable than a Hegemon world, and the Keynesian argument that a scarcity of reserve assets under a gold standard or at the zero lower bound is recessive. Our analysis is both positive and normative.

Date: 2016-01
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (13)

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http://scholar.harvard.edu/farhi/node/395971

Related works:
Journal Article: A Model of the International Monetary System (2018) Downloads
Working Paper: A Model of the International Monetary System (2016) Downloads
Working Paper: A Model of the International Monetary System (2016) Downloads
Working Paper: A Model of the International Monetary System (2016) Downloads
Working Paper: A Model of the International Monetary System (2016) Downloads
Working Paper: A Model of the International Monetary System (2015) Downloads
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