Séminaire

A Model of the International Monetary System

Matteo Maggiori (Harvard University)

17 octobre 2016, 12h30–14h00

Salle MF 323

Fédération des Banques Françaises Seminar

Résumé

We propose a simple model of the international monetary system. We study the world supply anddemand for reserve assets denominated in different currencies under a variety of scenarios: a Hegemonvs. a multipolar world; abundant vs. scarce reserve assets; a gold exchange standard vs. a floating ratesystem; away from vs. at the zero lower bound (ZLB). We rationalize the Triffin dilemma, which positsthe fundamental instability of the system, as well as the common prediction regarding the natural andbeneficial emergence of a multipolar world, the Nurkse warning that a multipolar world is more unstablethan a Hegemon world, and the Keynesian argument that a scarcity of reserve assets under a gold standardor at the ZLB is recessive. We show that competition among few countries in the issuance of reserveassets can have perverse effects on the total supply of reserve assets. We analyze forces that lead tothe endogenous emergence of a Hegemon. Our analysis is both positive and normative.

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