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Annual Conference

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International Macroeconomics, Money & Banking

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May 2023

Collateral Advantage: Exchange Rates, Capital Flows, and Global Cycles

Michael B. DEVEREUX, Charles ENGEL, Steve Pak Yeung WU
This paper explores the effect of global shocks in a two-country New Keynesian model in which US government debt has an advantage as a superior collateral asset in the balance sheets of banks. We show that the model can account for the observed response of the US dollar and US bond returns to a glob...
Keywords: Exchange rates, financial frictions, liquidity, convenience yield, dollar specialness
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Specialty Conference

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Specialty Conference

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Nov 2018

Lessons for Cryptocurrencies from Foreign Exchange Markets

Charles ENGEL
This essay brings insights from the academic literature on foreign exchange rate determination to the analysis of cryptocurrency markets. We present a simple framework to summarize the factors that determine exchange rates. To the extent that cryptocurrencies are like national currencies issued by c...
Keywords: Foreign exchange, cryptocurrency, money, digital currencies, policy
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2021

Scrambling for Dollars: International Liquidity, Banks and Exchange Rates

Charles ENGEL, Javier BIANCHI, Saki BIGIO
We develop a theory of exchange rate fluctuations arising from financial institutions’ demand for dollar liquid assets. Financial flows are unpredictable and may leave banks “scrambling for dollars.” Because of settlement frictions in interbank markets, a precautionary demand for dollar reserv...
Keywords: exchange rates, liquidity premia, monetary policy
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2014

Real Exchange Rates and Sectoral Productivity in the Eurozone

Martin BERKA, Charles ENGEL, Michael B. DEVEREUX
We investigate the link between real exchange rates and sectoral TFP for eurozone countries. We show that real exchange rate variation, both cross-country and time-series, closely accords with an amended Balassa-Samuelson interpretation, incorporating sectoral productivity shocks and a labor market ...
Keywords: Real Exchange Rates, Eurozone, productivity
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