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Author Vambery, Robert G
Title The Exorbitant Burden : The Impact of the U. S. Dollar's Reserve and Global Currency Status on the U. S. Twin-Deficits
Imprint Bingley : Emerald Publishing Limited, 2016
©2016
book jacket
Descript 1 online resource (281 pages)
text txt rdacontent
computer c rdamedia
online resource cr rdacarrier
Note Front Cover -- The Eoxorbitant Burden: The Impact of the U.S. Dollar's Reserve and Global Currency Status on the U.S. Twin-Deficits -- Copyright page -- Contents -- Summary -- List of Equations -- List of Boxes -- List of Charts -- List of Graphs -- List of Figures -- List of Tables -- List of Appendices -- Chapter 1 Introduction -- Chapter 2 Literature Review -- 2.1. Theory of Reserve Currency -- 2.1.1. Principle -- 2.1.2. Functions of the Leading Reserve Currency -- 2.1.2.1. Store of value -- 2.1.2.2. Medium of exchange -- 2.1.2.3. Unit of account -- 2.1.3. Reserves Currency Accumulation Motives -- 2.1.3.1. Mercantilist rule -- 2.1.3.2. Self-insurance precautionary rule -- 2.1.3.3. Collateral rule -- 2.1.4. Cost of Excessive Reserves Holdings -- 2.1.5. International Reserve Currency Status Criteria -- 2.1.5.1. Economic and geopolitical weight -- 2.1.5.2. Macroeconomic stability -- 2.1.5.3. Trade openness -- 2.1.5.4. Financial depth dynamics -- 2.1.5.5. Winning the inertial duel -- 2.1.6. The Implications of Achieving Reserve Currency Status -- 2.1.7. Empirical Evidence of the U.S. Dollar Reserve Currency Status -- 2.1.7.1. The U.S. dollar is the global leading anchor currency -- 2.1.7.2. The U.S. dollar is the major form of cash currency worldwide -- 2.1.7.3. The U.S. dollar is a transaction - Centric to Global Forex markets -- 2.1.7.4. The U.S. dollar is the currency of choice in the international trade invoicing and settlement -- 2.1.7.5. The U.S. dollar is a prominent currency in international debt market -- 2.1.7.6. The U.S. dollar is a key currency in banking cross-border lending and investment portfolio -- 2.1.7.7. The U.S. dollar dominates foreign reserves holdings -- 2.2. Reserve Currency Historical Background -- 2.2.1. Overview -- 2.2.2. Gold Standard: 1819-1914 -- 2.2.3. The British Pound Standard: 1914-1945
2.2.4. Bretton Woods System 1946-1973 -- 2.2.4.1. Overview -- 2.2.4.2. The dollar-gold exchange standard -- 2.2.4.3. The Bretton Woods System dilemma -- 2.2.4.4. Nixon shock -- 2.2.5. Fiduciary Dollar Standard (1973 - Present) -- 2.3. U.S. Dollar Global Liquidity -- 2.3.1. Overview -- 2.3.2. Private Dollar Global Liquidity -- 2.3.2.1. Eurodollar liquidity -- Definition -- Background -- Eurodollar market features -- Eurodollar market size -- 2.3.2.2. Dollar-derivatives global liquidity -- Defining a derivative -- Evolution -- Size and leverage of the derivatives market -- The magic of netting -- Dollar toxic liquidity -- Do derivatives pose an existential threat to us dollar reserve currency status? -- 2.3.2.3. The Repo Markets and the dollar-liquidity -- Definition -- Importance -- Dangers -- 2.3.3. Official Dollar-Global Liquidity -- 2.3.3.1. The Fed and the dollar global liquidity -- 2.3.3.2. The anatomy of banking bailout -- How big is too big to fail -- How dangerous is too big to fail -- The banking bailout -- 2.3.4. The Interaction between Private and Official Liquidity -- Chapter 3 Theoretical Framework -- 3.1. Overview -- 3.2. Great Powers Have Great Currencies -- 3.2.1. Leading Country Theoretical Outline -- 3.2.2. United States' Geopolitical Leadership -- 3.2.2.1. Military power -- Behind great economies, there are great militaries -- Link between the U.S. dollar supremacy to the United States -- Global security umbrella -- Strategic geography -- 3.2.2.2. Economic Power -- Most technologically advanced free-market economy -- The United States has the deepest financial markets -- Abundant natural resources -- Trading power -- Excellent competitiveness -- Sophisticated network of small, medium-sized and multinational businesses -- The most energetic private sector -- The most vibrant urban economic growth
The United States is wealthiest countries on earth -- 3.2.2.3. Political Power -- 3.2.2.4. Global Cultural Influence -- A nation committed to the global public good and knowledge generation -- The highest cultural diversity and vibrant performing immigrants -- 3.2.2.5. Summarizing -- From current account standpoint -- From capital account standpoint -- Can this game of depraving domestic markets of their Hard-won savings by accumulating unrewarding foreign assets continue f... -- 3.3. The Paradox of the U.S. Dollar -- 3.3.1. Overview -- 3.3.2. Dual Global and Domestic Role Paradox -- 3.3.3. Paradox of Strong Dollar Policy -- 3.3.4. Triffin Paradox -- 3.3.5. Trilemma Hypotheses -- 3.3.5.1. Mundell-Flemming trilemma -- 3.3.5.2. Rodrik Political trilemma -- 3.4. U.S. Dollar and Global Imbalances -- 3.4.1. Supply-Side School -- 3.4.2. Demand-Side School -- 3.4.3. Rebalancing Act -- 3.5. Exorbitant Privilege -- 3.5.1. Overview -- 3.5.2. Exorbitant Privilege Benefits to United States -- 3.5.2.1. Convenience for U.S. citizens -- Lower to zero exchange costs -- Lower interest to interest-free borrowing -- 3.5.2.2. Convenience for the U.S. Government -- Prestige -- Cheap financing for domestic and global strategies -- Insulation from foreign shocks -- 3.5.2.3. Seigniorage -- 3.5.3. Exorbitant Benefits to the Rest of the World -- 3.5.4. Exorbitant Privilege under Scrutiny -- 3.6. Exorbitant Burden -- 3.6.1. Competitiveness Burden -- 3.6.2. Exorbitant Reserve Currency Curse -- 3.6.3. Political Burden -- 3.6.4. Monetary Policy Burden -- 3.6.5. Capital Flow Burden -- 3.6.6. Reserve Currency Status Maintenance Burden -- 3.6.7. The Twin Deficit Burden -- 3.6.7.1. Overview -- 3.6.7.2. Twin Deficit Identity -- Keynesian and Mundell - Fleming twin-deficits hypothesis -- Ricardian equivalence twin-deficits hypothesis -- Twin divergence hypothesis -- 3.6.8. Debt Burden
3.7. Currency Wars -- 3.8. Is There a Viable Alternative to the US Dollar as the World Leading Reserve Currency? -- 3.8.1. Overview -- 3.8.2. Viable Alternatives -- 3.8.2.1. Special drawing rights (SDR) -- 3.8.2.2. EURO -- Euroland banking crisis -- Euroland sovereign debt crisis -- Euroland macroeconomic and growth crisis -- Euroland crises entanglement -- 3.8.2.3. Chinese Renminbi (RMB) -- Overview -- Challenges -- Social obstacles -- Economic challenges -- Financial constraints -- Political upheavals -- Environmental threats -- Geopolitical limitations -- 3.8.3. Is There Any Other Currency Alternative? -- 3.8.4. Multipolar Reserve Currency System -- 3.8.5. Is the U.S. Dollar Trapped into the Global System? -- 3.8.6. Way Forward -- Chapter 4 Methodology -- 4.1. Model Specification -- 4.1.1. Overview -- 4.1.2. Variables Specification -- 4.1.2.1. Dependent variable specification -- 4.1.2.2. Independent variables specification -- US Financial Openness (Finopen) -- US Geopolitical Power (geopower) -- US Trade Openness (Tradeopen) -- 4.1.3. Model-Equation Specification -- 4.1.4. Data -- 4.1.4.1. Data source -- 4.1.4.2. Data description -- 4.2. Quantitative Analysis -- 4.2.1. OLS Regression -- 4.2.2. Stationarity Tests -- 4.2.3. Cointegration Tests -- 4.2.3.1. Johansen maximum likelihood tests -- 4.2.3.2. Johansen ML results and analysis -- 4.2.4. Vector Error Correction Model -- 4.2.4.1. VECM regression -- Lagrange multiplier (LM) test -- VECM stability -- Granger causality Wald tests -- Johansen normalized coefficients -- 4.2.4.2. VECM diagnostic tests -- 4.2.5. Results Analysis -- Chapter 5 Conclusion -- Appendices -- Appendix A: OLS Regression at level -- Appendix B: OLS Regression at First Difference -- Appendix C: Johansen Tests for Cointegration -- Appendix D: Granger Causality Wald Tests (Vargranger Stata Command) -- References -- Index
This economic and political science work is a rigorous analysis that demonstrates that although it is a privilege and a benefit for the US to have its currency, the dollar, as the leading world reserve currency, the privilege also proves to be a very significant economic and security burden imposed on the nation
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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2020. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries
Link Print version: Vambery, Robert G. The Exorbitant Burden : The Impact of the U. S. Dollar's Reserve and Global Currency Status on the U. S. Twin-Deficits Bingley : Emerald Publishing Limited,c2016 9781785606410
Subject Money--United States--History
Electronic books
Alt Author Ganziro, Taranza T
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