Kekre, Rohan  and Lenel, Moritz   <br/><br/>
The flight to safety and international risk sharing 

 - The American Economic Review   
 - 114(6), Jun, 2024: p. 1650-1691 
<br/><br/> We study a business cycle model of the international monetary system featuring a time varying demand for safe dollar bonds, greater risk-bearing capacity in the United States than the rest of the world, and nominal rigidities. A flight to safety generates a dollar appreciation and decline in global output. Dollar bonds thus command a negative risk premium, and the United States holds a levered portfolio of capital finances in dollars. We quantify the effects of safety shocks and heterogeneity in risk-bearing capacity for global macroeconomic volatility, US external adjustment, and policy transmission, as of dollar swap lines.- Reproduced <br/><br/>https://www.aeaweb.org/articles?id=10.1257/aer.20211319<br/> 
<br/><br/><label>Subjects--Topical Terms: </label><br/>Flight to Safety, International Monetary System, Safe Dollar Bonds, Risk-Bearing Capacity, Dollar Appreciation, Global Output Decline, Negative Risk Premium, Leveraged Capital Portfolio, Safety Shocks, Macroeconomic Volatility, US External Adjustment, Policy Transmission, Dollar Swap Lines