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Author ORCID Identifier

https://orcid.org/0000-0002-4628-0613

Document Type

Open Access Dissertation

Degree Name

Doctor of Philosophy (PhD)

Degree Program

Economics

Year Degree Awarded

2019

Month Degree Awarded

September

First Advisor

Gerald Epstein

Second Advisor

Michael Ash

Third Advisor

Douglas Cliggott

Fourth Advisor

Bernard Morzuch

Subject Categories

International Economics

Abstract

This dissertation examines how U.S. capabilities in the global financial arena enable it to affect outcomes to its advantage. The first essay presents theoretical support for the hypothesis that holdings of U.S. sovereign debt collateralize public and private dollar borrowing in developing and emerging market economies. The second essay empirically tests the theory presented in Chapter 1 and provides evidence that, indeed, a statistically significant relationship exists between a country’s official holdings of US Treasury securities and its level of outstanding dollar credit. Our results demonstrate that even after controlling for a persistence effect (i.e., inertia) in US Treasury security holdings, increases in outstanding dollar credit lead to a statistically significant increase in holdings of US Treasury securities. Specifically, the estimated increase in US Treasury security holdings resulting from a $1 billion increase in outstanding dollar credit is $0.11 billion, all other factors held constant. Our result is robust to alternative definitions of our control variables and to the removal of outliers.

Finally, the third essay of this dissertation examines the United States’ unique and relatively recent ability to wield access to global financial networks as a distinctly effective sanctioning tool. To evaluate the impact of this new category of sanction, we utilize quarterly data on Iran’s real GDP during the period 1988-2016 and employ a time-series forecasting technique to measure the cost of the SWIFT sanction to Iran’s real GDP, where cost is measured by the difference between forecasted and actual real GDP. Results generated from estimating a seasonal autoregressive integrated moving average (ARIMA) model indicate that the impact to Iran’s real GDP of the SWIFT sanction is sizeable. Specifically, the average quarterly cost of the SWIFT sanction to Iran’s real GDP is approximately $204.3 billion (PPP-adjusted, 2015 international dollars), or 14.7% and 13.8% of Iran’s average quarterly actual and forecasted GDP, respectively.

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