Date of Award

Spring 2018

Document Type

Honors Thesis



First Advisor

Dr. David Carr

Second Advisor

Dr. Kathryn Birkeland

Third Advisor

Dr. Klaus Beckmann


Dollar, Currency, Reserve, Value


In most nations, currencies are able to appreciate and depreciate in order to maintain a healthy balance of trade. These fluctuations prevent prolonged periods of growth or stagnation by changing the relative price of imports and exports. However, the U.S. Dollar is in a unique position as the world reserve currency. This status means, in simplified terms, that demand is strong and consistent for the Dollar regardless of economic conditions, potentially keeping its value above where it would naturally move to if allowed to fluctuate normally. This study seeks to analyze whether it is possible to demonstrate mathematically that the value of the Dollar has been affected by world reserve currency status by comparing it to other world currency values over time. The analysis will be conducted by estimating a model of uncovered interest rate parity using monthly data over the course of 11 years. The result, for several possible reasons, was that no such effect could be found.



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