Global impact of a shift in foreign reserves to euros
AbstractThis paper considers the potential impact of a shift in official foreign reserves from dollars to euros using a global DSGE model. This paper uses QUEST III, a multi-region global DSGE model, to study the macroeconomic effects of a gradual equalization of official foreign reserves between dollars and euros. We simulate a scenario of a shift in the composition of foreign reserves holdings from the present ratio of 65 percent dollars and 25 percent euros to equal 45 percent shares over a 10 years period. We assume imperfect substitutability between financial assets to allow this shift to have real effects. Our simulations point towards small real effects due to the reduction in real interest rates resulting from this shift in official holdings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Empirica.
Volume (Year): 36 (2009)
Issue (Month): 1 (February)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100261
Globalization; Global imbalances; Reserve currency; Euro area; DSGE modelling; C68; F31; F32;
Other versions of this item:
- Fritz Breuss & Werner Roeger & Jan in 't Veld, 2008. "Global Impact of a Shift in Foreign Reserves to Euros," European Economy - Economic Papers 345, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maurice Obstfeld & Kenneth S. Rogoff, 2005. "Global Current Account Imbalances and Exchange Rate Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(1), pages 67-146.
- Philip R. Lane & Gian Maria Milesi-Ferretti, 2007.
"Europe and global imbalances,"
CEPR & CES & MSH, vol. 22, pages 519-573, 07.
- Philip R. Lane & Gian-Maria Milesi-Ferretti, 2007. "Europe and Global Imbalances," IMF Working Papers 07/144, International Monetary Fund.
- Philip R. Lane & Gian Maria Milesi-Ferretti, 2007. "Europe and Global Imbalances," The Institute for International Integration Studies Discussion Paper Series iiisdp226, IIIS.
- Pierre-Olivier Gourinchas & Helene Rey, 2005.
"International Financial Adjustment,"
NBER Working Papers
11155, National Bureau of Economic Research, Inc.
- Pierre-Olivier Gourinchas & Hélène Rey, 2007. "International Financial Adjustment," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 665-703, 08.
- Pierre-Olivier Gourinchas & Hélène Rey, 2005. "International financial adjustment," Proceedings, Federal Reserve Bank of San Francisco.
- Pierre-Olivier Gourinchas & Hélène Rey, 2005. "International Financial Adjustment," International Finance 0505004, EconWPA.
- Gourinchas, Pierre-Olivier & Rey, Hélène, 2005. "International Financial Adjustment," CEPR Discussion Papers 4923, C.E.P.R. Discussion Papers.
- Helene Rey & Pierre Olivier Gourinchas, 2005. "International Financial Adjustment," 2005 Meeting Papers 169, Society for Economic Dynamics.
- Gourinchas, Pierre-Olivier & Rey, HÃ©lÃ¨ne, 2005. "International Financial Adjustment," Center for International and Development Economics Research, Working Paper Series qt124628cx, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Graham Bird & Ramkishen Rajan, 2003.
"Too Much of a Good Thing? The Adequacy of International Reserves in the Aftermath of Crises,"
The World Economy,
Wiley Blackwell, vol. 26(6), pages 873-891, 06.
- Graham Bird & Ramkishen Rajan, 2002. "Too Much of a Good Thing?: The Adequacy of International Reserves in the Aftermath of Crises," Centre for International Economic Studies Working Papers 2002-10, University of Adelaide, Centre for International Economic Studies.
- Elias Papaioannou & Richard Portes, 2008. "The international role of the euro: a status report," European Economy - Economic Papers 317, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- Roland Beck & Michael Fidora, 2008.
"The impact of sovereign wealth funds on global financial markets,"
Intereconomics: Review of European Economic Policy,
Springer, vol. 43(6), pages 349-358, November.
- Roland Beck & Michael Fidora, 2008. "The impact of sovereign wealth funds on global financial markets," Occasional Paper Series 91, European Central Bank.
- Menzie D. Chinn & Jeffrey A. Frankel, 2008.
"The Euro May Over the Next 15 Years Surpass the Dollar as Leading International Currency,"
NBER Working Papers
13909, National Bureau of Economic Research, Inc.
- Chinn, Menzie & Frankel, Jeffrey, 2008. "The Euro May over the Next 15 Years Surpass the Dollar as Leading International Currency," Working Paper Series rwp08-016, Harvard University, John F. Kennedy School of Government.
- Thierry Bracke & Matthieu Bussière & Michael Fidora & Roland Straub, 2008. "A framework for assessing global imbalances," Occasional Paper Series 78, European Central Bank.
- Henderson, Dale W. & Rogoff, Kenneth, 1982. "Negative net foreign asset positions and stability in a world portfolio balance model," Journal of International Economics, Elsevier, vol. 13(1-2), pages 85-104, August.
- Masson, Paul R., 2007. "The growing role of the euro in emerging market finance," Policy Research Working Paper Series 4381, The World Bank.
- Fritz Breuss, 2009. "Lacking "Europeanisation" of National Business Cycles as a Risk for the Euro Area," Austrian Economic Quarterly, WIFO, vol. 14(2), pages 91-104, June.
- Fritz Breuss, 2011. "Downsizing the Eurozone into an OCA or Entry into a Fiscal Transfer Union," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(4), pages 05-12, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.