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About the Author(s)


Pierre-Olivier Gourinchas is a research associate in the NBER's programs in finance and international macroeconomics, economic fluctuations and growth, and asset pricing. He received his Ph.D. from MIT in 1996 and is currently professor of economics at the University of California, Berkeley, where he heads the Clausen Center for International Business and Policy.

He also is editor-in-chief of the International Monetary Fund's IMF Economic Review.

In 2007, Gourinchas received the Bernácer Prize for best European economist under the age of 40 working in macroeconomics and finance, and in 2008 he received the prize for best French economist under 40. In 2012–13, he served on the French Council of Economic Advisors to the prime minister and since 2014 he has been a member of the French National Economic Commission, an advisory board to the French Treasury.

Gourinchas is a visiting scholar at the Federal Reserve Bank of San Francisco and has been a regular visitor at numerous central banks. His main research interests are in international macroeconomics and finance. His recent research focuses on capital flows and global imbalances, the determination of global interest rates and exchange rates, and the international monetary system. He grew up in France and currently lives in Berkeley with his wife. He has two daughters. In his spare time, he enjoys reading, sailing the San Francisco Bay, and cycling up the East Bay hills.


1. For a discussion of the original Bretton Woods negotiations and especially the exchanges between J. M. Keynes, on the U.K. delegation, and H. D. White, from the U.S. Treasury, see B. Stein, The Battle of Bretton Woods, Princeton, NJ: Princeton University Press, 2013.   Go to ⤴︎
2. R. Aron, Le Figaro, February 16, 1965, from Les Articles du Figaro, vol. II, Paris, France: Editions de Fallois, 1994, p.1475. For a historical perspective on the exorbitant privilege, see also B. Eichengreen, Exorbitant Privilege: The Rise and Fall of the Dollar, Oxford, United Kingdom: Oxford University Press, 2012.   Go to ⤴︎
3. J. Rueff, "The West is Risking a Credit Collapse," Fortune, June 1961, pp.126–7, 262, and 167–268.   Go to ⤴︎
4. R. Triffin, Gold and the Dollar Crisis: The Future of Convertibility, New Haven, CT: Yale University Press, 1960.   Go to ⤴︎
5. R. Mundell, "Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates," Canadian Journal of Economic and Political Science, 29(4), 1963, pp. 475–85.   Go to ⤴︎
6. P.-O. Gourinchas and H. Rey, "From World Banker to World Venture Capitalist: U.S. External Adjustment and the Exorbitant Privilege," NBER Working Paper 11563, August 2005, and in G7 Current Account Imbalances: Sustainability and Adjustment, R. Clarida, ed., Chicago, IL: University of Chicago Press, 2007. See also P.-O. Gourinchas and H. Rey, "External Adjustment, Global Imbalances and Valuation Effects," NBER Working Paper 19240, July 2013, and Chapter 10 in G. Gopinath, E. Helpman, and K. Rogoff, eds., Handbook of International Economics, Volume 4, Amsterdam, The Netherlands: North Holland, Elsevier, 2014, pp.585–645. For a more conservative estimate on a shorter time period, see S. Curcuru, T. Dvorak, and F. Warnock, "Cross-Border Return Differentials," NBER Working Paper 13768, February 2008, and Quarterly Journal of Economics, 123(4), 2008, pp. 1495–1530.   Go to ⤴︎
7. Recent work on the structure of global banking flows helps nuance this picture. For instance, H. Shin, "Global Banking Glut and Loan Risk Premium," IMF Economic Review, 60(2), 2012, pp. 155–92, shows that prior to the financial crisis, foreign banks borrowed dollars from U.S. money market funds, and invested in riskier U.S. assets such as mortgage backed securities.   Go to ⤴︎
8. See for instance M. Obstfeld, "Does the Current Account Still Matter," NBER Working Paper 17877, March 2012, and American Economic Review, 102(3), May 2012, pp. 1-23, and also P.-O. Gourinchas and H. Rey, "External Adjustment, Global Imbalances and Valuation Effects," NBER Working Paper 19240, July 2013, and Chapter 10 in, Handbook of International Economics, Volume 4, op. cit., for a range of countries.   Go to ⤴︎
9. P.-O. Gourinchas and H. Rey, "International Financial Adjustment," NBER Working Paper 11155, February 2005, and Journal of Political Economy, 115(4), August 2007, pp. 665–703. See also G. Corsetti and P. Konstantinou, "What Drives U.S. Foreign Borrowing? Evidence on the External Adjustment to Transitory and Permanent Shocks," American Economic Review, 102(2), April 2012, pp. 1062–92.   Go to ⤴︎
10. However, K. Rogoff and T. Tashiro, "Japan's Exorbitant Privilege," Journal of the Japanese and International Economies, 35, March 2015, pp. 43–61, find positive excess returns for Japan between 2001 and 2013.   Go to ⤴︎
11. R. Caballero, E. Farhi, and P.-O. Gourinchas, "An Equilibrium Model of 'Global Imbalances' and Low Interest Rates," NBER Working Paper 11996, February 2006, and American Economic Review, 98(1), 2008, pp. 358–93. See also B. Bernanke, "The Global Saving Glut and the U.S. Current Account Deficit," Sandridge Lecture, Virginia Association of Economics, Richmond, VA, Federal Reserve Board, March 2005; and E. Mendoza, V. Quadrini, and J.-V. Rios-Rull, "Financial Integration, Financial Deepness, and Global Imbalances," NBER Working Paper 12909, February 2007, and Journal of Political Economy, 117(3), 2009, pp. 371–410.   Go to ⤴︎
12. The implications in terms of overall current account surplus or deficit are more complex when both risky and safe assets are traded and depend on the relative scarcities in safe and risky asset. See R. Caballero, E. Farhi, and P.-O. Gourinchas, "Safe Asset Scarcity and Aggregate Demand," NBER Working Paper 22044, February 2016, and American Economic Review Papers and Proceedings, forthcoming.   Go to ⤴︎
13. On China, see Z. Song, K. Storesletten, and F. Zilibotti, "Growing Like China," American Economic Review, 101(1), 2011, pp. 196-233; and N. Coeurdacier, S. Guibaud, and K. Jin, "Credit Constraints and Growth in a Global Economy," American Economic Review, 105(9), 2015, pp. 2838–81.   Go to ⤴︎
14. P.-O. Gourinchas, H. Rey, and N. Govillot, "Exorbitant Privilege and Exorbitant Duty," University of California, Berkeley, mimeo, May 2010.   Go to ⤴︎
15. P.-O. Gourinchas, H. Rey, and K. Truempler, "The Financial Crisis and The Geography of Wealth Transfers," NBER Working Paper 17353, August 2011, and Journal of International Economics, 88(2), 2012, pp. 266–83, explore the geographic distribution of valuation gains and losses during the financial crisis and find that losses are concentrated in the U.S., the eurozone, and China.   Go to ⤴︎
16. Most estimates of the natural rate of interest rate such as T. Laubach and J. Williams, "Measuring the Natural Rate of Interest," Federal Reserve Bank of San Francisco Working Paper 2015–16, October 2015, or J. Hamilton, E. Harris, J. Hatzius, and K. West, "The Equilibrium Real Funds Rate: Past, Present, and Future," NBER Working Paper 21476, August 2015, are consistent with a substantial decline in the natural real interest rate. Strictly speaking, the ZLB should be defined as the lowest admissible nominal interest rate. As demonstrated by various central banks in recent months, this lowest admissible nominal interest rate may well be negative.   Go to ⤴︎
17. R. Caballero, E. Farhi, and P.-O. Gourinchas, "Global Imbalances and Currency Wars at the ZLB," NBER Working Paper 21670, October 2015. A related analysis is G. Eggertsson, N. Mehrotra, S. Singh, and L. Summers, "A Contagious Malady? Open Economy Dimensions of Secular Stagnation," Working paper, November 2015. By definition, the supply of true safe assets does not change with a decline in output, hence the recession disproportionately affects safe asset demand.   Go to ⤴︎
18. J. Kareken and N. Wallace, "On the Indeterminacy of Equilibrium Exchange Rates," Quarterly Journal of Economics, 96(2), 1981, pp. 207–22.   Go to ⤴︎
19. Outside the ZLB, this type of beggar-thy-neighbor policy is unnecessary since each country can reach potential output via traditional monetary policy while letting its currency fluctuate.   Go to ⤴︎
20. H. Rey, "Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence," NBER Working Paper 21162, May 2015, and in Proceedings of the Economic Policy Symposium, Jackson Hole, 2013, Federal Reserve Bank of Kansas City; and E. Farhi and I. Werning, "Dilemma not Trilemma? Capital Controls and Exchange Rates with Volatile Capital Flows," IMF Economic Review, 62(4), 2014, pp. 569–605. See also B. Bernanke, "Federal Reserve Policy in an International Context," IMF Economic Review, Mundell Fleming lecture, forthcoming 2016, for a dissenting view.   Go to ⤴︎
21. E. Farhi, P.-O. Gourinchas, and H. Rey, Reforming the International Monetary System, London, UK: Centre for Economic Policy Research (CEPR), 2011; See also, M. Obstfeld, "The International Monetary System: Living with Asymmetry," NBER Working Paper 17641, December 2011, and in R. Feenstra and A. Taylor, eds., Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, Chicago, IL: University of Chicago Press, 2014, pp. 301–36.   Go to ⤴︎
22. L. Summers, "Have We Entered an Age of Secular Stagnation?" IMF Economic Review, 63(1), 2015, pp. 277–80.   Go to ⤴︎
23. P.-O. Gourinchas and O. Jeanne, "Global Safe Assets," BIS Working Paper 399, December 2012; See also Z. He, A. Krishnamurthy, and K. Millbradt, "A Model of the Reserve Asset," Stanford Graduate School of Business mimeo, 2015, for a model of competition between reserve assets.   Go to ⤴︎
24. P.-O. Gourinchas and M. Obstfeld, "Stories of the Twentieth Century for the Twenty-First," NBER Working Paper 17252, July 2011, and American Economic Journal: Macroeconomics, 4(1), 2012, pp. 226–65. Go to ⤴︎

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