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The dollar and its discontents

  • Jeanne, Olivier

Has the US dollar delivered the benefits that the rest of the world is expecting from its holdings of international liquidity? US government debt has been liquid and safe, and it is supplied in sufficient quantity. But it has given a low return to the countries that accumulated the most reserves, especially when those returns are measured in terms of the countries' own consumption. I argue in this paper that the countries that accumulate the most reserves should expect a low return in terms of their own consumption, and that there is little that international monetary reform can do to change that fact.

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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 31 (2012)
Issue (Month): 8 ()
Pages: 1976-1989

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Handle: RePEc:eee:jimfin:v:31:y:2012:i:8:p:1976-1989
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  1. Aizenman, Joshua & Jinjarak, Yothin & PARK, Donghyun Dr., 2010. "International reserves and swap lines: substitutes or complements? ," Santa Cruz Department of Economics, Working Paper Series qt81b751sh, Department of Economics, UC Santa Cruz.
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  9. Keynote Speech by Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 29, pages 33-48, November.
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  12. Peter B. Kenen, 2010. "The Substitution Account as a First Step Toward Reform of the International Monetary System," Policy Briefs PB10-6, Peterson Institute for International Economics.
  13. Carroll, Christopher D. & Jeanne, Olivier, 2009. "A tractable model of precautionary reserves, net foreign assets, or sovereign wealth funds," CFS Working Paper Series 2009/15, Center for Financial Studies (CFS).
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