Dollar Crisis Research Articles

From serials crisis to dollar crisis: The compelling evidence against APC‐based open access in sub‐Saharan Africa countries

Key points The article processing charges (APC)‐based model of open access has constituted a major obstacle to achieving open access in developing countries. High exchange rates of local currencies to the dollar make sustaining the APC open access model impractical. Other approaches should be used to achieve equitable and inclusive open access.

Impact of Ukraine-Russia War on Online Business in Bangladesh: A Case Study on Book-O-Pedia

Book-O-Pedia is a Bangladeshi pre-order-based book importer on Facebook. This case study focuses on the challenges faced by the import-based business during a global crisis and how the company’s survival became critical. This is a single case study and the data were collected from the owner’s in-depth interviews using a semi-structured questionnaire. The theoretical framework of this case study is based on the StimulusOrganism-Response (SOR) model. The study focuses on the present struggle and challenges faced by Book-O-Pedia and how the global crisis affected the decisions of the entrepreneur. The findings indicated that due to the COVID-19 pandemic and the Ukraine-Russia leading to global inflation, dollar crisis, and high import costs, the sales growth of ‘Book-O-Pedia’ has decreased, and all expansion plans have been halted. This case enriches the literature on import-based and online entrepreneurship businesses. The case type was decisional.

Addressing the dollar crisis by investigating underlying causes, effects, and strategic solutions in emerging economies

Foreign exchange reserves (FER), especially dollar assets, are vital for a developing country to maintain economic stability, foster growth, and protect against unexpected amendments. In recent years, particularly since the onset of COVID-19, several emerging countries have experienced significant economic hardship due to a crisis in foreign reserves. This has led to inflation and disruptions in supply chains, healthcare, and various service facilities. Despite the gravity of this issue, previous studies have not investigated the causes and consequences of such sudden crises. This study aims to fill this gap by investigating the causes and consequences of sudden FER crises in a developing country, specifically Bangladesh, through a systematic review. The study also explores innovative process-oriented policies to mitigate the immediate FER crisis. The systematic literature review followed the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines. It included 90 articles published between 2020 and 2023. The results discovered that the FER crisis in Bangladesh has been triggered by both external factors (such as the COVID-19 pandemic, the Russia-Ukraine conflict, trade imbalances, and remittances) and internal factors (including large infrastructure projects, complexities in the banking sector, local project subsidies, a managed floating exchange rate, and an over-reliance on the ready-made garments sector). These factors escorted deflation of the national currency, causing further inflation, declining domestic purchasing capacity, and raising concerns about food security. Additionally, price hikes and unauthorized storage of daily necessities made accessing daily essentials challenging for locals. The government has implemented three policy interventions, including managing consumer demand, safeguarding the supply of goods, and regulating continuous market monitoring to overcome the challenges. This study proposes eight innovative process-oriented policy recommendations for mitigating the immediate foreign exchange crisis and promoting sustainable economic development. Overall, this study offers valuable contributions in developing sustainable global economic policies. It fosters improved recovery and reuse of materials and energy while advancing long-term growth in developing nations.

Rent Seeking in Power and Energy Sector in Bangladesh

As the power and energy sector of Bangladesh has become increasingly susceptible to external shocks like Ukraine war and dollar crisis, the growing dependency on imported energy is being questioned from the energy security point of view. While the technology and policy actors hold depletion of gas resources and the need for diversification as the reasons to justify increasing import dependency, the proponents for energy security using indigenous resources point out at the negligence in exploring potential indigenous gas reserve and the inability to deploy renewable energy. Why in last one-decade Bangladesh adopted new energies like coal, nuclear, and LNG, rather than exploring natural gas and incentivizing solar and wind, has still remained a puzzle. This paper uses the rent seeking framework to identify how rent seeking structures differ across energy technologies and whether the differences had any implications for incentivizing some energy use while not incentivizing others. Journal of the Asiatic Society of Bangladesh (Hum.), Vol. 68(2), 2023, pp. 263-286

Employing Recurrent Neural Networks to Forecast the Dollar Exchange Rate in the Parallel Market of Iraq

In this study, neural recurrent neural networks (RNN) have been used to forecast the price of dollars in Iraqi dinars, as it is clear that the government's efforts to control prices in the parallel markets, the commercial markets witnessed a decline in the exchange rate, but it rose again. Which indicates an economic problem that is still present in the country. Despite adjusting the exchange rate of the dinar, the dollar crisis in Iraq has not ended yet. Here we want to forecast the daily price of the dollar against Iraqi dinars for the common next 30 days. According to the results the RNN model have been performed for the data under consideration with different numbers of hidden layer and nodes. The best architecture for the RNN model was [1,10,1,1] using soft plus activation function, which gives the performance of 85% for the training dataset and (92% and 90%) for the testing and validation datasets respectively, with Mse (0.018, 0.000417, and 0.000477) for training, testing, and validation respectively at epoch 4. According to the results of the forecasted values which start from 15 May 2023 to 13 June 2023 the price of dollars will be between 1390 to 1435.

Southern Rhodesia and Britain’s Discriminatory Sterling Area: The Dollar Crisis and Post-War Colonial Tobacco Trade, 1947–1960

ABSTRACT Drawing on archival material from the National Archives of Zimbabwe, Adam Matthews Digital Archives and newspaper reports, this study locates Southern Rhodesia’s tobacco industry within post-war currency developments and the politics of international trade. Following the Second World War, the shift in the financial balance of economic power triggered by the shift from the gold standard to the reformed gold standard had a lasting impact on global trade. This resulted in the British retreat from the position of hosting the global key currency denominated in sterling towards the US dollar from 1944 onwards. This study utilises the effects of this shift in the case of Southern Rhodesia, a British colony, and its impact on one specific commodity: tobacco. Because of the dollar crisis of 1947 in Britain, however, and Cold War geopolitical considerations explored in this paper, Britain was extended some leeway by the United States to recover from the losses of two world wars and a depression, as well as the loss of key currency status in ways that resulted in the establishment of a discriminatory sterling area that informed colonial trade dynamics in interesting ways. This paper thus brings the experience of Southern Rhodesia’s tobacco industry into sharp focus by centring it in the context of international exchange arrangements and trade considerations in the post-Second World War period. In doing so, it illuminates imperial-colonial relations in a settler colonial setting against the background of post-war Anglo-American economic relations.

L’ECONOMIA ITALIANA E LE FRATTURE DELLA GLOBALIZZAZIONE

Il documento presenta una ricostruzione sintetica delle principali tappe del processo di globalizzazione e dell'economia italiana dalla fine della seconda guerra mondiale ad oggi. Per quanto riguarda lo scenario internazionale, si individuano due chiare fratture: la fine dell'"età dell'oro" con la crisi del dollaro dell'agosto 1971 e lo shock petrolifero del 1973; la crisi finanziaria del 2007-2008, dovuta all'accumulo di gravi squilibri macroeconomici negli anni della cosiddetta "Grande Moderazione". Queste due fratture trovano una chiara corrispondenza in due analoghe fratture dello sviluppo economico italiano. L'Italia, tuttavia, presenta una terza frattura intermedia con la crisi della lira dell'agosto 1992 legata a specifiche debolezze interne; uno spartiacque per la politica economica italiana. Oggi le tensioni nei rapporti commerciali internazionali e gli impulsi populisti nei Paesi avanzati testimoniano che la crisi del 2008 è ben lungi dall'essere ricomposta nelle sue determinanti. Il documento propone un suggerimento: alla base delle dinamiche economiche degli ultimi 75 anni c'è un rapporto irrisolto tra crescita economica capitalistica ed espansione della democrazia a livello nazionale e internazionale.

The U.S. Economy, Public Policies, and the Dollar as an International Currency Reserve

The “innocent” outsourcing, the creeping globalization, and the “guilty” latest global financial crisis have caused serious and lasting socio-economic problems to the U.S. The current account deficit (consumption exceeds production in the U.S.), which causes a capital account surplus (capital inflows in the U.S.) and the scale of financing needed to support the U.S. fiscal deficit (and the private sectors and households debts) together with the Federal Reserve’s policy of keeping U.S. interest rates low for ten years to ward off deflation, to stimulate the financial markets, and to revive growth, has revived concerns about a sudden and sharp depreciation of the U.S. dollar, an increase in inflation, and a new burst of the current bubble in the financial market, which will cause a global depression. Americans have lost an enormous amount of their purchasing power and wealth during the last 90 years, due to seven financial crises. The wars in Iraq, Afghanistan, Syria, and Libya have turned Muslim investors to other currencies holdings instead of the U.S. dollar. This article examines potential triggers and indicators of such a crisis and posits concrete policy options to limit U.S. vulnerability, due to loss of manufacturing and to the possibility of a plummeting dollar. But, even with a depreciated dollar, the U.S. economy cannot compete with the Chinese one because the cost of production in China is less than 1/10 of the U.S. cost. U.S. has to maximize the social welfare of the country, which means to protect its domestic industries and sectors of the economy. It argues that the obvious long-term response to the risk of a dollar crisis and deterioration of the U.S. welfare is to limit buildup of the United States’ external debt (trade deficits) and domestic ones (public and private debts), and recommends that larger reserves (and well-understood mechanisms for borrowing foreign exchange reserves from major foreign central banks) would help to reduce the United States’ vulnerability to such a crisis. As a debtor, the U.S. is benefited from the devaluation of its currency and from the protection of its domestic manufacturing.

Historia Económica Mundial 1950–1990

This article presents a brief review of the most important events in the world economy during second half of twentieth century. The article reviews the best economic performance of the capitalism (1950s and 1960s); the ascend of the Southeast Asian economies, the dollar crisis, the oil price crisis and the Latin American external debt crisis (1970s and 1980s); the collapse of socialism in Eastern Europe, the expansion of economic integration and globalization, and the rise of the Chinese economy (1990s).

The Emerging Economies and Changing Prospects of the Multicurrency Global Order: Avenues and Challenges in Times Ahead

The coming years will see emerging economies like China, Brazil, India, South Africa as main potential holders for the global economic development along with similar pace development in Russia, Saharan Africa and Middle-East. This transformation will be experienced with changes in corporate, investment capacity, financial systems in each of the economies along with changes in the currency values and foreign reserves. The world order is already witnessing change in the currency capacity with ongoing ‘Dollar crisis – Yuan gains’. This is a strong indicator of the potentials of multicurrency system led by the new players and falling predominance of US Dollar as international currency. The World Bank predicts of either –status quo or a new multicurrency order, and this may be just the right time to be able to observe the changes and be able to see future avenues. The study reads the different time zones viz from Great Depression to World War II to current Recession in selected economies and the nature of effect on global currency orders & practices. The aim of the study is to contribute to the possibilities of multicurrency global economy. The study also underlines the complexities of multicurrency system in relation to SDR as established by the IMF and the challenges that the emerging economies may have to address to relating to the internationalization of the currencies.

Triebkräfte und Lösungsansätze Globaler und Europäischer Leistungsbilanzungleichgewichte (Determinations of and Economic Policy Solutions for Global and Intra-European Imbalances)

The paper scrutinizes the determinants of global and intra-European current account imbalances, which have continued to grow since the turn of the millennium up to the recent crisis. For Europe, the reasons of the current account imbalances are identified to originate in the German attempts to consolidate public finances and to restore the international competitiveness of the enterprise sector after the end of its reunification boom. On a global level, expansionary monetary and fiscal policies of the US, which interact with the macroeconomic policies of the countries at the periphery of the world dollar standard, are seen to be at the root of the global imbalances. Based on the different types of current account imbalances in Europe and the informal dollar standard different crisis and adjustment scenarios are discussed. Due to the pivotal role of the dollar in the international monetary system, a fundamental consolidation of US monetary and fiscal policies is seen as the prerequisite for a reduction of global and intra-European imbalances.

Confidence Game: Fritz Machlup, Robert Triffin and Plans to Reform the World Monetary System

Nearly a half-century before the financial crisis of 2008, there was another time when reforming the world monetary system was on everyone’s lips and many academics and policy makers were developing and attempting to promote plans for its reconstruction before illiquidity, speculation and loss of confidence brought the system to a predicted ruin. Not since the Great Depression was the fear of a total financial meltdown so real. This paper examines two competing proposals for reforming the system and the two economists, Robert Triffin and Fritz Machlup, who led the charge, one for central reserves and a common currency, the other for flexible exchange rates. We know in the end that flexible exchange rates prevailed, that the underlying system was not “reformed.” We know also that Triffin believed that the outcome was the result of Fritz Machlup’s influence, through the Bellagio and Burgenstock conferences he convened, on influential policy markers and academics who had strong policy-making ties. As Triffin wrote in Gold and the Dollar Crisis, “They may have received unintended encouragement from the greater stress placed by most of my academic friends (first and foremost Professor Fritz Machlup) on the need to demonetize gold rather than on the need to control the flood of dollars into the world reserve pool. Most of the academic enthusiasm, however, was centered on floating exchange rates…. (Triffin, 1968 p. 8). How the arguments evolved, how their advocates defended the impact of their proposals on monetary reform, how they built consensus around these proposals, and ultimately how the final choice of exchange regime impacted deficits and confidence are the questions addressed in this paper. The paper also sheds light on the public policy influence of academic economists in the period following WWII and through the 1980s. Drawing on the personal papers of Fritz Machlup, housed in the Hoover Institution, the case is made that Machlup and Triffin were close friends who did not underestimate each other’s influence on government and world organizations, but sought through extensive correspondence, conference presentations and publications to convince the other that his proposal was all that was necessary to restore balance and confidence. This paper begins with a review of the literature on confidence and framing (Section 2), then turns to the critical balance of payments problems facing the world after WWII and to a broad discussion of alternative policy options and their advocates (Section 3). The Triffin and Machlup arguments are made in Sections 4 and 5. Section 6 discusses Fritz Machlup’s leadership role in the Bellagio Group conferences to build consensus around confidence as the root cause of financial instability and the confrontation of ideas in the conferences as well as in the journals of the days. Section 7 returns to the question posed in the introduction and draws conclusions. The paper takes an historico-biographical approach, predominantly drawing on the published papers of Robert Triffin and Fritz Machlup, but drawing limitedly on the personal papers of Fritz Machlup, housed in the Hoover Institution, and the Robert Triffin Papers at Yale University. [*Note: This paper is part of a book in progress on Fritz Machlup and the Bellagio Grpup: Plans for Reforming the World Monetary System. The curent version includes a number of changes and includes a bibliography.]

Instability of finance markets

This lecture focuses on the economic crisis in the world today, and can be seen as a continuation of my Geilo 2007 lecture where I observed that we had a Dollar crisis based on the worldwide flood of Dollars (M3) that began after 1971 [1,2]. Here, I want to focus on why we have a finance crisis, which is essentially a Dollar crisis, and what I think will need to be done to get out of it. Toward that end, the instability of normal liquid finance markets is contrasted with the worse instability of a liquidity drought, so I'll begin by explaining the former. The current liquidity drought can be compared with the Great Depression and is the covered in the second part of this paper.

An Interpretation of the Collapsing Process of the Bretton Woods System

This paper attempts to determine the environments that market confidence might play a significant role in the collapse of the Bretton Woods system. We build a game-theoretic model of currency crises where a continuum of small speculators can decide their market confidence and trading positions. In the model, the convertibility of dollar is assumed to exhibit a long-term downtrend due to Triffin’s dilemma. The problem is analyzed on the grounds of both certainty and uncertainty. In the certainty case, we find that if the convertibility of dollar is low enough, a dollar crisis is inevitable, but if the convertibility is in an intermediate range with multiple equilibria, the Bretton Woods system is vulnerable to self-fulfilling speculation. In the uncertainty case, the incidence of the confidence crises will disproportionately increase as the convertibility of dollar falls. Lastly, this paper shows that the Federal Reserve Bank’s secrecy may extend the maximum lifespan of the Bretton Woods system.

Those Current Account Imbalances: A Sceptical View1

The international current account imbalances, where the United States has a vast deficit, and several countries, notably Japan, China, Germany and the oil exporters have corresponding surpluses, are usually seen as problems. The argument here is that current account imbalances simply indicate intertemporal trade – the exchange of goods and services for claims. There are likely to be gains from trade of that kind as from ordinary trade. What, then, are the problems? This paper considers five scenarios, notably one where net savings of the surplus countries decline so that the world real interest rate rises, and another where the US fiscal deficit is reduced, so that the world real interest rate falls and there could be a worldwide aggregate demand problem, essentially caused by the high net savings of the surplus countries. The paper reviews the reasons for the large surpluses in terms of savings and investment ratios (especially China) and also discusses the long‐term problem for the United States. While four of the scenarios involve a decline in the dollar, they do not necessarily imply a sudden – and even ‘disruptive’– dollar crisis.

The Coming Dollar Decline: A Letter Commenting on "Divergent Views on the Coming Dollar Crisis" by J. Bradford Delong

Arun Khanna responds to J. Bradford Delong by arguing that the U.S. dollar has four key strengths that preclude a meltdown in the value of the dollar.

Return Dynamics under Coordination Risk: A Quantitative Approach

Coordination games, such as global games models, have proven useful in theoretically explaining agents behavior and market outcomes during financial crisis. Such models have not been estimated. We propose extensions to the standard global games models to a dynamic context of normal and turbulent times, and use efficient method of moments as estimation procedure. We apply the model to the yen dollar crisis of 1998.

Divergent Views on the Coming Dollar Crisis

Is the U.S. vulnerable to a full-blown dollar crisis? Why are international finance economists scared and jittery, but domestically-oriented macroeconomists much less concerned?

Is it a yen or a dollar crisis in the currency market?

Is it a yen or a dollar crisis in the currency market?

Protecting capital from itself: U.S. attempts to regulate the Eurocurrency system

In 1979 and 1980 the U.S. government attempted to regulate the Eurocurrency system in order to stabilize the international monetary and financial systems, and for U.S. domestic monetary purposes. The conflict between the U.S. government (especially the Treasury Department and the Federal Reserve Board) and U.S.-based transnational banks (TNBs) illustrates TNBs' contradictory interests, which are neither self-evident nor easily discernible, even to TNBs themselves. The state comes to play a mediating role vis-a-vis TNBs in an only partially successful attempt to transform contradictory interests into coherent policy, resulting in conflict between the state and TNBs. The origins of U.S. regulatory initiatives are rooted in multilateral attempts to supervise banks between 1974 and 1978, and the failure of such coordination during the 1978 dollar crisis. From the conflict between U.S. officials and U.S. TNBs emerge varying concepts of TNBs' interests. After examining the reasons for the failure of the U.S. proposals, I conclude by suggesting some implications of TNBs' contradictory interests for statist and social conflict theories of the advanced capitalist state. Few theories of the state have adequately taken into account the complexity and contradictory interests of transnational capital.