Dominant Currency Paradigm: A Review

Gita Gopinath and Oleg Itskhoki

No 29556, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A handful of currencies, especially the US dollar, play a dominant role in international trade. We survey the active theoretical and empirical literature that documents patterns of currency use in global trade, the implications of dominant currencies for international transmission of shocks, exchange rate pass-through, expenditure switching, and optimal monetary policy. We describe advances in the endogenous currency choice literature including conditions for the emergence and persistence of dominant currency equilibria.

JEL-codes: F30 F40 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-ifn, nep-mac, nep-mon and nep-opm
Note: EFG IFM ITI ME
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