Thread by Iñaki Aldasoro

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A thread with links to academic work on the role of the dollar done by Hyun and coauthors in recent years.
In addition, there is a wealth of work done by others, at the BIS (including yours truly especially on dollar funding - see eg pinned tweet) & externally of course as well

First, two seminal papers by V. Bruno and @HyunSongShin:
Cross-border banking and global liquidity (academic.oup.com/restud/article/82/2/535/1585168), highlighting the bank leverage cycle as the determinant of the transmission of financial conditions across borders through banking sector capital flows.
and "Capital flows and the risk taking channel of monetary policy" (www.sciencedirect.com/science/article/pii/S0304393214001688), with evidence of monetary policy spillovers on cross-border bank capital flows and the US dollar exchange rate through the banking sector.
in "Global dollar credit and carry trades: a firm level analysis" (academic.oup.com/rfs/article/30/3/703/2758633?login=true), Valentina & Hyun show that that EME firms with already high cash holdings are more likely to issue USD-denominated bonds, esp. during periods when the dollar carry trade is more favorable
in "Exchange Rates and the Working Capital Channel of Trade Fluctuations" (www.aeaweb.org/articles?id=10.1257/pandp.20181063), they provide a model & empricial evidence for Asian firms of the financial channel of exchange rates, which goes in the opposite direction to the competitiveness channel
In "The dollar, bank leverage and deviations form CIP" (www.aeaweb.org/articles?id=10.1257/aeri.20180322&&from=f), Hyun, Stefan, Wenxin and Catherine document a triangular relationship: a stronger USD goes hand in hand with larger deviations from CIP and contractions of cross-border bank lending in dollars.
A theme picked up with other coauthors in "The dollar, bank leverage and real economic activity: an evolving relationship" (www.aeaweb.org/articles?id=10.1257/pandp.20201097): the influence of the USD on real economic activity & global trade increased since the GFC, while that of the VIX has decreased.
Similarly, in "Currency Depreciation and Emerging Market Corporate Distress" (pubsonline.informs.org/doi/10.1287/mnsc.2018.3280), Valentina and Hyun document a financial motive for dollar bond issuance by EME firms in carry trade–like transactions that leave them vulnerable to dollar strength.
In "Risk capacity, portfolio choice and exchange rates" (papers.ssrn.com/sol3/papers.cfm?abstract_id=4028446), Hyun, Ilhyock & Boris argue the broad dollar index emerges as a global factor in bond portfolio flows.
In "Bond risk premia and the exchnage rate" (onlinelibrary.wiley.com/doi/10.1111/jmcb.12760), the same team shows that EME currency appreciation goes hand in hand with compressed sovereign bond spreads, even for local currency sovereign bonds.
whereas in "Dollar beta and stock returns" (academic.oup.com/ooec/article/doi/10.1093/ooec/odac003/6562364?login=true), Hyun, Ilhyock & Valentina show that stock returns also reflect the financial channel of exchange rates, with higher local currency stock returns associated with a weaker dollar.
in "The Dollar Exchange Rate as a Global Risk Factor: Evidence from Investment" (link.springer.com/epdf/10.1057/s41308-019-00074-4?author_access_token=ZhAmTmBNMNfCv-Ku8jYChlxOt48VBPO...), Stefan, Valentina, Catherine & Hyun find that a stronger dollar is associated with lower growth in dollar-denominated cross-border bank flows & lower real investment in EMEs
Finally, in "Dollar and exports" (www.bis.org/publ/work819.htm), Valentina and Hyun find that following a dollar appreciation exporters that are more reliant on dollar-funded bank credit for working capital suffer a greater decline in credit and slowdown in exports, including to US
Of course, I cannot rule out I missed some...
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