Macroeconomic interdependence and the international role of the dollar

Linda Goldberg and Cédric Tille

Journal of Monetary Economics, 2009, vol. 56, issue 7, 990-1003

Abstract: The U.S. dollar holds a dominant place in the invoicing of international trade. In addition to a direct role for most U.S. exports and imports, it plays a global role for trade flows outside the United States. Using a simple center-periphery model, we show that this global role magnifies the exposure of periphery countries to the U.S.'s monetary policy even when trade flows with the U.S. are limited. This generates gains from coordinated monetary policy, as U.S. policy leads to inefficient movements in intra-periphery relative prices. Despite this inefficiency, flexible exchange rates remain valuable.

Keywords: Exchange; rate; Pass-through; Center-periphery; Invoicing; Monetary; policy (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(09)00126-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Macroeconomic Interdependence and the International Role of the Dollar (2008)
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:eee:moneco:v:56:y:2009:i:7:p:990-1003

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().