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Exorbitant Privilege: The Rise and Fall of the Dollar

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  • Eichengreen, Barry

    (Professor of Political Science and Economics, University of California, Berkeley)

Abstract

For more than half a century, the dollar has been not just America's currency but the world's. It is used globally by importers, exporters, investors, governments and central banks alike. This singular role of the dollar is a source of strength for the United States. It is, as a critic of U.S. policies once put it, America's "exorbitant privilege." But now, with U.S. budget deficits extending as far as the eye can see, holding dollars is viewed as a losing proposition. Some say that the dollar may soon cease to be the world's standard currency DS which would depress U.S. living standards and weaken the country's international influence. In Exorbitant Privilege, one of our foremost economists, Barry Eichengreen, traces the rise of the dollar to international prominence. He shows how the greenback dominated internationally in the second half of the 20th century for the same reasons that the United States dominated the global economy. But now, with the rise of China, India, Brazil and other emerging economies, America no longer towers over the global economy. It follows, Eichengreen argues, that the dollar will not be as dominant. But this does not mean that coming changes need be sudden and dire DL or that the dollar is doomed to lose its international status. Challenging the presumption that there is room for only one true global currency, Eichengreen shows that several currencies have regularly shared this role. What was true in the distant past will be true, once again, in the not-too-distant future. The dollar will lose its international currency status, Eichengreen warns, only if the United States repeats the mistakes that led to the financial crisis and only if it fails to put its fiscal and financial house in order. Incisive, challenging and iconoclastic, Exorbitant Privilege, is a fascinating analysis of the changes that lie ahead. It is a challenge, equally, to those who warn that the dollar is doomed and to those who regard its continuing dominance as inevitable.

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Bibliographic Info

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This book is provided by Oxford University Press in its series OUP Catalogue with number 9780199596713 and published in 2011.

ISBN: 9780199596713
Order: http://ukcatalogue.oup.com/product/9780199596713.do
Handle: RePEc:oxp:obooks:9780199596713

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How big can the U.S. current account stay?
    by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2014-07-24 12:12:52
  2. A useless endeavor
    by Joao Marcus Marinho Nunes in Historinhas on 2014-07-25 18:39:35
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Cited by:
  1. Eswar S. Prasad, 2011. "Role reversal in global finance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 339-390.
  2. Linda Goldberg, 2011. "The international role of the dollar: Does it matter if this changes?," Staff Reports 522, Federal Reserve Bank of New York.
  3. Christoph Fischer, 2011. "Currency blocs in the 21st century," Globalization and Monetary Policy Institute Working Paper 87, Federal Reserve Bank of Dallas.
  4. Michael D. Bordo & Harold James, 2011. "Reserves and Baskets," NBER Working Papers 17492, National Bureau of Economic Research, Inc.
  5. Stergios Skaperdas, 2011. "Policymaking in the Eurozone and the Core vs Periphery Problem," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 12(2), pages 12-18, 07.
  6. Canzoneri, Matthew & Cumby, Robert & Diba, Behzad & López-Salido, David, 2013. "Key currency status: An exorbitant privilege and an extraordinary risk," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 371-393.
  7. Wilhelm Kohler, 2012. "The Eurosystem in Times of Crises: Greece in the Role of a Reserve Currency Country?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 14-22, 02.
  8. Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," NBER Working Papers 17379, National Bureau of Economic Research, Inc.
  9. repec:hal:gmonwp:hal-00961708 is not listed on IDEAS

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