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International Dollar Flows

Author

Listed:
  • Banegas, Ayelen

    () (Board of Governors of the Federal Reserve System (U.S.))

  • Judson, Ruth

    () (Board of Governors of the Federal Reserve System (U.S.))

  • Sims, Charles

    (Federal Reserve Bank of New York)

  • Stebunovs, Viktors

    () (Board of Governors of the Federal Reserve System (U.S.))

Abstract

Using confidential Federal Reserve data, we study the factors driving U.S. banknote flows between the United States and other countries. These flows are a significant component of capital flows in emerging market economies, where physical U.S. currency functions as a safe asset and precautionary demand for U.S. banknotes is a form of flight to quality. Prior to the global financial crisis, country-specific factors, including local economic uncertainty, largely explain the volume and heterogeneity of the flows. Since the crisis, global factors, particularly, global economic uncertainty, explain the flows markedly well. Further, precautionary demand for U.S. banknotes is not episodic.

Suggested Citation

  • Banegas, Ayelen & Judson, Ruth & Sims, Charles & Stebunovs, Viktors, 2015. "International Dollar Flows," International Finance Discussion Papers 1144, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgif:1144
    DOI: 10.17016/IFDP.2015.1144
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    File URL: http://dx.doi.org/10.17016/IFDP.2015.1144
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    References listed on IDEAS

    as
    1. Chinn, Menzie D. & Ito, Hiro, 2006. "What matters for financial development? Capital controls, institutions, and interactions," Journal of Development Economics, Elsevier, vol. 81(1), pages 163-192, October.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    3. Fernandez-Arias, Eduardo, 1996. "The new wave of private capital inflows: Push or pull?," Journal of Development Economics, Elsevier, vol. 48(2), pages 389-418, March.
    4. Forbes, Kristin J., 2004. "The Asian flu and Russian virus: the international transmission of crises in firm-level data," Journal of International Economics, Elsevier, vol. 63(1), pages 59-92, May.
    5. Bartzsch, Nikolaus & Rösl, Gerhard & Seitz, Franz, 2013. "Currency movements within and outside a currency union: The case of Germany and the euro area," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 393-401.
    6. David Greenlaw & James D. Hamilton & Peter Hooper & Frederic S. Mishkin, 2013. "Crunch Time: Fiscal Crises and the Role of Monetary Policy," NBER Working Papers 19297, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Judson, Ruth, 2017. "The Death of Cash? Not So Fast: Demand for U.S. Currency at Home and Abroad, 1990-2016," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162910, Deutsche Bundesbank.
    2. repec:bis:bisqtr:1803g is not listed on IDEAS

    More about this item

    Keywords

    capital flows; currency flows; U.S. banknotes; safe asset; emerging market economies; economic uncertainty; flight to quality; capital flight; money demand.;

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F30 - International Economics - - International Finance - - - General

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