Inertia of the US Dollar as a Key Currency Through the Two Crises

Eiji Ogawa and Makoto Muto

Emerging Markets Finance and Trade, 2017, vol. 53, issue 12, 2706-2724

Abstract: This article investigates effects of the global financial crisis (GFC) as well as the euro zone crisis on the position of US dollar as a key currency. We base on a money-in-the-utility model to analyze empirically whether the two crises changed a coefficient on real balance of US dollar in the utility function or its contribution to utility. An empirical result is that the contribution of US dollar to utility decreased during a period when financial institutions faced the US dollar liquidity shortages. The liquidity shortage decreased the contribution of US dollar to utility during the global financial crisis.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:53:y:2017:i:12:p:2706-2724

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DOI: 10.1080/1540496X.2017.1336998

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