Portland State University PDXScholar Economics Faculty Publications and Presentations Economics 7-2018 A Key Currency View of Global Imbalance Hiro Ito Portland State University,
[email protected] Robert N. Mccauley Bank for International Settlements (BIS) Follow this and additional works at: https://pdxscholar.library.pdx.edu/econ_fac Part of the Economics Commons Let us know how access to this document benefits ou.y Citation Details Ito, H., & McCauley, R. N. (2019). A key currency view of global imbalances. Journal of International Money and Finance, 94, 97-115. This Post-Print is brought to you for free and open access. It has been accepted for inclusion in Economics Faculty Publications and Presentations by an authorized administrator of PDXScholar. Please contact us if we can make this document more accessible:
[email protected]. A key Currency View of Global Imbalances Hiro Ito1 and Robert N. McCauley2 July 6, 2018 Abstract This study divides the world into currency zones according to the co-movement of each currency with the key currencies. The dollar zone groups economies that produce well over half of global GDP. The euro zone now includes almost all of Europe and some commodity producers, but remains less than half the size of the dollar zone. The dollar zone share has shown striking stability despite big shifts across zones over time. These include the demise of the sterling zone and the expansion of the DM/euro from northwestern Europe to Europe and beyond. Global imbalances look very different from a currency perspective. In the 2000s, the dollar zone’s current account improved as the dollar depreciated, even as the US current account plumbed all-time lows.