Beschreibung:
<jats:p>The United States Dollar (USD) replacement of the sterling as the dominant
currency is not only the result of the "invisible hand," but also the
"visible hand." This study analyzes the effect of the monetary policy in the
United States (U.S.) on the international share of the USD from 1914 to 1945
using the Bayesian technique, to estimate the time-varying parameter vector
autoregressive (TVP-VAR) model. The study posits two main findings. First,
the time-point impulse response shows that the increase in the U.S. interest
rate results in an increase in the international share of the USD, implying
that this increase has an expansion effect on the USD, and the effect has no
time-varying characteristics. Second, the equal time interval impulse
response shows that the effect of the monetary policy on the share of the
USD is greater in the short term.</jats:p>