Das, Mitali; Gopinath, Gita; Kim, Taehoon; Stein, Jeremy C. - 2023
This paper explores how non-U.S. central banks behave when firms in their economies engage in currency mismatch … externality: individual central banks may tend to over-accumulate dollar reserves, relative to what a global planner would choose …. This is because individual central banks do not internalize that their hoarding of reserves exacerbates a global scarcity …