Date of Award
Dr. David Carr
Dr. Kathryn Birkeland
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.
Waltz, Jared, "An Analysis of World Reserve Currency Status on the Value of the U.S. Dollar" (2018). Honors Thesis. 33.