Exorbitant privilege and fiscal autonomy
研究储备货币发行国在负向冲击时能否通过扩张性财政政策稳定经济而不引发外国贷款者负面反应，基于G7国家数据发现该特权确实存在且随时间增强。
Abstract An aspect of the ‘exorbitant privilege’ we examine in this paper is the ability of the reserve currency issuer to run expansionary fiscal policies to stabilize the economy when a negative shock occurs without triggering an adverse reaction of foreign lenders, including, in particular, higher interest rates imposed by global capital markets. To explore this ‘privilege’ we look at the G7, a group of advanced economies that enjoy larger fiscal space than other countries. We estimate a panel regression model to explain the differences in magnitude of fiscal policy responses to common shocks as a function of countries’ reserve currency status. We find that, indeed, the prevalence of this channel is not rejected by the data and that in fact it seems to have become stronger over time, supported by the global build-up of currency reserves.