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Inertia of the US Dollar as a Key Currency Through the Two Crises

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  • Eiji Ogawa
  • Makoto Muto

Abstract

This article investigates effects of the global financial crisis (GFC) as well as the euro zone crisis on the position of US dollar as a key currency. We base on a money-in-the-utility model to analyze empirically whether the two crises changed a coefficient on real balance of US dollar in the utility function or its contribution to utility. An empirical result is that the contribution of US dollar to utility decreased during a period when financial institutions faced the US dollar liquidity shortages. The liquidity shortage decreased the contribution of US dollar to utility during the global financial crisis.

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  • Eiji Ogawa & Makoto Muto, 2017. "Inertia of the US Dollar as a Key Currency Through the Two Crises," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(12), pages 2706-2724, December.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:12:p:2706-2724
    DOI: 10.1080/1540496X.2017.1336998
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    Cited by:

    1. Kazunobu Hayakawa & Nuttawut LAKSANAPANYAKUL & Toshiyuki Matsuura & Taiyo Yoshimi, 2024. "Export Dynamics and Invoicing Currency," Keio-IES Discussion Paper Series 2024-005, Institute for Economics Studies, Keio University.
    2. Eiji Ogawa & Makoto Muto, 2019. "What Determines Utility of International Currencies?," JRFM, MDPI, vol. 12(1), pages 1-31, January.

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