Currency Turmoil in an Unbalanced World Economy

Michel Aglietta and Virginie Coudert ()
Additional contact information
Michel Aglietta: University Paris Ouest-Nanterre, CEPII, France Stratégie

Bankers, Markets & Investors, 2015, issue 139, 46-57

Abstract: Like all asset prices, exchange rates are moved by a momentum created by alternating long phases of overvaluation and undervaluation with no stabilization at their equilibrium value. The dollar is particularly prone to these large fluctuations that regularly distort real exchange rates between major currencies. Misalignment in exchange rates is a repeated feature of dollar cycles, as much as unsustainable imbalances in the current accounts.Moreover, the appreciation phase of the dollar that has begun for several months is particularly disturbing for emerging countries that are heavily indebted in dollars. This paper studies the consequences of dollar appreciation on the world economy. The prospect of a new dollar cycle is worrisome since most countries, far from deleveraging after the financial crisis, have massively increased their debt relative to GDP.

Keywords: Dollar Cycle; High Indebtedness, International Liquidity, Exorbitant Privilege (search for similar items in EconPapers)
JEL-codes: F31 F33 F42 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.revue-banque.fr/article/currency-turmoil-unbalanced-world-economy (text/html)
price

Related works:
Working Paper: Currency turmoil in an unbalanced world economy (2015)
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:rbq:journl:i:139:p:46-57

Ordering information: This journal article can be ordered from
12 rue du Quatre-Septembre, 75002 PARIS France
http://www.eska.fr

Access Statistics for this article

More articles in Bankers, Markets & Investors from ESKA Publishing
Bibliographic data for series maintained by Marise Urbano ().