Suppose that under the postwar dollar standard system, foreign central banks had held dollar reserves in the

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Suppose that under the postwar “dollar standard” system, foreign central banks had held dollar reserves in the form of green dollar bills hidden in their vaults rather than in the form of U.S. Treasury bills. Would the international monetary adjustment mechanism have been symmetric or asymmetric? (Hint: Think about what happens to the U.S. and Japanese money supplies, for example, when the Bank of Japan sells yen for dollar bills that it then keeps.)

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International Finance: Theory And Policy

ISBN: 9781292065199

10th Edition

Authors: Krugman, Paul R.; Melitz, Marc J.; Obstfeld, Maurice

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