Demand for Safe Assets and Spillovers from the Global Dollar Cycle

US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying “global dollar cycle”. Results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging markets. In contrast, effects on advanced economies are small and short-lived. Emerging market commodity exporters historically experienced larger negative spillovers than commodity importers, reflecting a strong negative link between the US dollar and commodity prices. In terms of policies, more anchored inflation expectations can mitigate the initial negative spillovers while more flexible exchange rates can speed up the subsequent economic recovery.

Authors

Publication Details

Journal
IMF Working Paper
Published
2025-04-01
DOI
https://doi.org/10.5089/9798229007092.001
Primary Topic
Market Dynamics and Volatility
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Demand for Safe Assets and Spillovers from the Global Dollar Cycle

Rudolfs Bems, Racha Moussa, Cían Allen, Lukas Boer
IMF Working Paper
Market Dynamics and Volatility
article

Demand for Safe Assets and Spillovers from the Global Dollar Cycle

Rudolfs Bems, Racha Moussa, Cían Allen, Lukas Boer
article en

Abstract

US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying “global dollar cycle”. Results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging markets. In contrast, effects on advanced economies are small and short-lived. Emerging market commodity exporters historically experienced larger negative spillovers than commodity importers, reflecting a strong negative link between the US dollar and commodity prices. In terms of policies, more anchored inflation expectations can mitigate the initial negative spillovers while more flexible exchange rates can speed up the subsequent economic recovery.

IMF Working PaperVol. 2025(065)
Openalex Percentile: Top 90%
Market Dynamics and Volatility
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.