Publication Type: Conference Paper/Unpublished Manuscript
Abstract: In this paper, we test whether small holders of a reserve currency free-ride on large holders when the reserve currency is expected to depreciate. We test this using monthly data on central bank holdings of US treasuries during 2003 and 2004.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: In Congressional elections, incumbent candidates possess a number of advantages over their opponents. Considering the sizeable gap in their ability to raise and spend funds, money is often assumed to be one of those advantages. However, scholarly research provides mixed evidence on the effects of spending by incumbent candidates in competitive elections, especially at the individual level. This paper develops a dynamic model of how the information available to the electorate responds to different spending strategies by Congressional candidates. The logic of this model implies that the main effect of incumbent spending is to reduce the marginal effect of challenger spending. This hypothesis is confirmed by analysis based on the data originally used by Jacobson (1990) in opening up inquiry on this topic at the individual level. Additional implications of the theoretical model are discussed in the conclusion.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Although it is now common practice for leaders of
developing countries to formally or informally peg their currency to a
stronger currency, such as the U.S. dollar, President Mahaud’s decision
to dollarize the Ecuadorian economy in January 2000 shocked most of his
citizens, the International Monetary Fund, and much of the
international community. At the time, Mahaud announced that the policy
was part of a larger effort to control inflation and bring some
economic stability to Ecuador, thereby making it more attractive to
international investors. Although concerns over inflation certainly
played a role in the decision to dollarize, both scholars and
Ecuadorian pundits have noted that Mahaud’s decision has never been
fully explained. The purpose of the paper is to explain this decision
and evaluate its impact. In tracing the decision to dollarize, the
authors will rely on interviews with the principal policy-makers, newly
released government papers, and journalists’ accounts. Additionally,
the paper will conduct a quantitative analysis of the cost and benefits
of the policy both on the economy as a whole and by segments of the
population. In particular it seeks to measure the impact of the
dollarization policy on varying geographic regions, ethnicities,
economic classes and business sectors. The paper would contribute to a
greater understanding of the mechanics and outcomes of developing
country financial decisions, the role of varying domestic political and
economic variables, and international constraints.

Publication Type: Conference Paper/Unpublished Manuscript
Abstract: The most central question about the international monetary system today is whether the euro will rival or replace the dollar as the world?s key currency. One oft-cited weakness of the euro is the lack of political integration within the EU, or relatedly, whether the EU?s ?democratic deficit? hinders its progress. I examine this set of criticisms based on historical precedents, looking at the rise of earlier world currencies for evidence. This paper makes two main claims. First, too much of our understanding of IPE rests on periods of American and British dominance and that our understanding of currency politics should be broadened by looking at past international currencies such as those of Athens, Rome, Byzantium, China, the Islamic Caliphate, Florence, Venice, Spain, and Hapsburg Austria.Second, based on these historical cases, I argue that strong political leadership at the center is not a prerequisite for currency leadership. A strong central economy and effective political leadership have often been useful but they are not necessary. In fact, some earlier currencies?like the Spanish real?have thrived as a result of domestic weakness. Thus, while there may be other reasons to doubt the euro?s ascendance, political fragmentation and the democratic deficit are not fatal flaws.

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Using data sufficiently recent to include the spectacular rise and fall of crude oil prices in 2008, this paper tests the relationship between crude prices and the exchange rate value of the U.S. dollar, then considers the implications for the makers of monetary policy. The results demonstrate, first, a significant long term relationship between the dollar’s value and the price of oil, and second, that oil price has the stronger impact on the dollar than does the dollar on oil. These quantitative results generally support the conclusions of Amando and Norden (1997), Chaudhuri and Daniel (1998), Chen and Chen (2007), and Coudert et al. (2007); however, a state of interdependence between the variables is most likely.