This paper develops a general equilibrium model to study how the "exorbitant advantage" works, whether it is sustainable, and what may be the consequences if it is removed. Its main findings are: (1) the center country that issues the reserve currency enjoys the "exorbitant advantage" in the...

This paper investigates how monetary shocks are transmitted internationally. It shows that where a national currency is used as an international medium of exchange, the international money is non-neutral. In particular, an increase in the supply of international money leads to a transfer of real...

This paper develops a general equilibrium 2x2 Ricardian model that demonstrates the possibility of immiserising growth as a result of a productivity improvement in a country¡¯s export industry. The model also shows that immiserising growth can be avoided by improving the productivity of the...